Investing in green companies gains traction

Posted On Monday, 31 October 2011 02:00 Published by
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Local and international evidence suggests that companies that are more aware of risks and opportunities in the green economy are outperforming their peers, says Jacoleen Simpson, senior transactor at Nedbank Capital

Addressing a sustainability seminar in Sandton on Tuesday, Simpson said it was important to show that earnings were sustainable - this was beneficial to both the company and the investor.

Simpson noted that currently the UN PRI (Principles of Responsible Investment) has 920 signatories with approximately $30-trillion assets under management.

From 1999 to 2010, the number of sustainability indices being offered by members of the World Federation of Exchanges increased from two to more than 50 and as of July this year, the Carbon Disclosure Project has 551 financial institutions as signatories with $71-trillion assets under management worldwide, she noted.

According to European Sustainable Investment Forum (Eurosif), as of December 7 2010, sustainable investment in emerging markets topped $300 billion.

Simpson added that in its latest report on emerging markets, Eurosif had identified SA as a pre-eminent destination for sustainable investment, with transparent reporting and above-average integration of social issues.

"Such a perception can only be enhanced by companies adopting the King III injunction to produce integrated annual reports," she said.

As of July, there were 26 local asset managers who were signatories to the United Nations Principles of Responsible Investment.

Simpson noted that on July 19, the Code for Responsible Investing in SA (Crisa) was launched. CRISA is a SA-specific voluntary code, modelled on the United Nations Principles of Responsible Investment.

She said, however, that the JSE SRI Index remained the sole index benchmarking any form of responsible investment.

"While a step in the right direction, the SRI index has been criticised for being neither black nor green enough," she said.

Nelis Engelbrecht - head of Carbon at Nedbank Capital , said the carbon projects process was quite a complex one. He noted China and India in past 10 years had concluded about 1,000 projects, but Africa had been lagging, with only 20 registered projects on the continent. He attributed this to a lack of awareness and the fact that in the past, companies didn't know how to go about starting these projects or how much it would cost. He added that projects with the UN were bureaucratic and complex.

Publisher: I-Net Bridge
Source: I-Net Bridge

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