Several years ago, I felt a need to understand the intersection of global industrial development’s tremendous interaction with our environment and the financial risks and opportunities being created by this interplay. Through my research, it became clear to me that Portfolio 21 Investments had developed a unique set of skills and intellectual capital that made them the leading environmental investment firm. I am very happy to have been able to accept an appointment to their Board as non-executive Chairman.
Environmental investing is not something that can be done from afar, or by reading a company’s annual report or website, nor by screening some database. For environmental investors, there is no herd to follow. It requires in-depth fundamental research, hands-on engagement with companies and many other sources of information, combined with experience and independent thinking. This is trailblazing work, requiring courage and creativity. That’s what Portfolio 21 Investments does and that’s why I am so enthusiastic about our future.
The need for excellence in environmental investing exists because many of the environmental costs and risks being created by companies may not be accurately reflected in stock prices. These costs have historically been pushed off onto society at large, even though they rightly belong to the companies that create them. At some point, these costs may come back to the companies that actually took the risks, and that can impact shareholders. As March is the one-year anniversary of the tsunami that triggered a disaster waiting to happen at Tokyo Electric Power Company’s (TEPCO) Fukushima reactor, I need not reach for examples. Good investment analysts who choose to do the work required can assess these risks and factor them into investment decisions.
To me, TEPCO illustrates that the risks to stockholders associated with a company’s environmental interaction may not currently be reflected in its stock or bond price. It literally took a tsunami and a nuclear meltdown for investors to react to the risks that were all there prior to the disaster. And in the year since the disaster at Fukushima TEPCO stock has declined by over 88%.
But environmental investing is not all about risk avoidance. There are many companies doing excellent work and moving their products and business models forward in order to thrive in an ecologically constrained world. These are the companies that Portfolio 21’s investment strategy seeks out worldwide—the leaders and innovators.
That is what drew me into the field, my perception of the needs and the opportunities. Portfolio 21 Investments’ unique position as the leading environmental investor is what drew us together. One other point, I do hope to leave the world a better place in whatever large or small way possible. That is, of course, one other characteristic that I share with each of the people at Portfolio 21 Investments and I suspect with all of you reading this blog post. Perhaps that will be the topic of a future posting…
The information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security.
John Streur is non-executive Chairman of Portfolio 21 Investments. He has 25 years experience in the field of investment management.