A book just out reveals that investors have already allocated over US$5trillion to sustainable investment strategies. This could kick-start an economic recovery strategy, according to the writers of the book, entitled Sustainable Investing: The Art of Long-Term Performance.
Authors Cary Krosinsky is vice president for Trucost Plc. Nick Robins is head of the HSBC Climate Change Centre of Excellence, believe that up to a quarter of public equities, as well as corporate and government bonds, (estimated to be worth US$120 trillion in 2006) are partly exposed to sustainable issues such as environmental goals and social imperatives. The investment in these types of instruments helps finance a resurgent and more resilient global economy, the authors assert.
Sustainable investment is becoming the trend and accelerating this are attractive returns. The asset class outperformed mainstream indices between December 2002 and December 2007, returning +18.7%, on average. By comparison, the MSCI World Index returned +17%, whilst the S&P 500 Index returned +13.2% and the FTSE 100 Index returned +13.0%.
Interesting examples of sustainable investment vehicles the book cites include the Winslow Green Growth Fund, which significantly outperformed silver specialist Warren Buffett’s holding company Berkshire Hathaway, registering 200% growth compared to Buffet’s 100%.
Commenting on his inclusion in the book, Jackson Robinson, Portfolio Manager for The Winslow Green Growth Fund, says that he believes that the green economy “offers one of the most promising paths to economic recovery, and therefore continues to appear very attractive to us as a long-term investment opportunity.”
That pretty much sums up the book’s message. The authors make the case for a long term growth trend of the sustainable investing funds in general. They believe that investors on the look-out for superior risk-adjusted returns do best to incorporate long-term environmental, social and economic trends within investment and ownership decision-making, rather than following the short-term strategies that have brought the global economy to its knees.
According to Nick Robins,
whether they are huge pension funds or individual savers, investors are looking for strategies that offer long-term security– and sustainable investing provides the answer. As the world seeks to stimulate an economic recovery, sustainable investing in clean technologies, microfinance and social enterprise offer proven routes to generating wealth and resolving pressing problems such as climate change and global poverty.”
The book is published by Earthscan.