SRI in the Rockies: ‘Once in a lifetime’ opportunity to buy green stocks

Green economy could boost potential for flagging markets.

A shift towards an economy based on renewable energy could be one of the only ways to stimulate growth and avoid a prolonged global economic downturn, according to Adam Seitchik, chief investment officer at Trillium Asset Management, the Boston-based SRI fund manager. Speaking at the SRI in the Rockies conference, Seitchik presented a 20th century overview of investment returns to back up calls for institutional investors to push for the transition to a sustainable low carbon economy as a way of stimulating growth. Seitchek suggested that equity returns on a business-as-usual case in the first half of the 21st century could mirror those of the first half of the 20th century when US stocks returned just 4.9% after inflation, Germany -1.8% and Japan 0.1%: “The S&P inflated adjusted index for the first ten years of this century shows flat growth, and there are good reasons to think that without stimulus we won’t see the same kind of growth we saw from 1950 to 2000.”
In a separate panel, Jack Robinson, founder and president of Winslow Green Mutual Funds, said he believed now could be the best buying moment for green companies “we are ever going to see”. He said many companies focused on renewable energy and clean tech themes were trading below their cash positions, sometimes their intrinsic values and regularly their “replacement value – the amount it would cost to recreate the same company.Robinson said there were over 1000 US public companies with green initiatives and he predicted that growth in green stocks would return to double-digit figures, albeit with a delay during the current economic crisis. Sarah Forrest, executive director of GS Sustain, the ESG research unit of Goldman Sachs, said she saw two main trends going forward, which would link in to the growing SRI concerns of investors: Forrest said: “One major trend will be the shift of economic powers to the so-called BRIC powers. Within the next 20 years we believe 50% of global growth will come from these countries. The second trend is that this shift of industrial development throws up all sorts of social and environmental challenges.” Speaking on a separate panel, but addressing a related point, Melissa Brown, former executive director of the Association of Sustainable and Responsible Investment in Asia (ASrIA), said emerging markets’ exposure by western investors had grown seriously, but that analysis of ESG issues was patchy and that good research could be expensive and intensive: “What you think engagement and analysis means is not the same for Asia. Investors are trying to get appropriate benchmarks for the performance of Asian companies. Asian companies are starting to talk about the intangibles of climate risk, but the social side is different. Asian companies will not sit around a table and take your criticisms. You need to have coherent strategies.”