The Stern Review on the Economics of Climate Change (1) published today, delivers a stark warning to governments, business leaders and individuals on the economic threat of global warming. But, argues Emma Howard Boyd, Jupiter's head of socially responsible investment, the Report presents investors with the clearest possible signal that going green is not only good for the environment but good for profits.
 
Emma said: "The Stern Review shows that preventing major climate change is about economic self-interest and that carrying on 'business as usual' will, in itself, wreck economic growth in the long term. Governments around the world are increasingly recognising that they have to take climate change seriously and their efforts to meet environmental targets will present increasing opportunities for investors.
 
"Until recently it has been largely the institutional investors who have recognised the potential benefits. Pension fund trustees, who have been concerned about the fiduciary duty aspects of taking climate change into account, are increasingly focusing on the impact climate change can have on their investment portfolios. This has been supported by a Freshfields (2) report published in 2005, which overturned the longstanding conventional wisdom that fiduciary duty precludes environmental, social, or governance considerations in institutional investment decisions.
 
Emma Howard Boyd adds: "This year we have seen higher flows into the Jupiter Ecology Fund on the back of strong performance and a growing interest in investing in environmental solutions. The Stern Review only adds to sense of urgency for tackling climate change, and green investment has an important part to play in financing technological solutions."
 
Many companies and individuals are already adjusting their behaviour to take account of environmental issues. Ford, for example, recently announced plans to spend £1bn on environmental projects such as biofuels and new generation diesels. BSkyB has turned 'carbon-neutral'; General Electric has reinvented itself as a green technology company, attracting some $10bn of sales to this area, while Tesco is planning a £100m investment in renewables.
 
This is, in effect, a virtuous circle from which investors are well-placed to benefit. Witness Sainsburys, for example, which earlier this year announced a 5% increase in food sales during the first quarter. However, sales of organic foods were up by 17% during the same period.
 
Jupiter has encapsulated these trends in six areas it believes will benefit most from this global trend - water management, clean energy, green transport, waste management, sustainable living and environmental services.
 
Water management, for example, is one of the hottest global issues right now. In 20 years, average water supply is expected to drop by a third and yet demand is spiralling. In the US, an additional 54m water customers and 33m wastewater customers are expected by 2015, while China is faced with being home to 22% of the world's population and yet having only 7% of the world's fresh water.
 
It is estimated that $22bn must be spent in China on wastewater treatment alone to meet the needs of 900m extra people living in urban areas by 2015. For canny investors these are market opportunities and ones we can take advantage of by investing in companies such as American based Itron.
 
 In the field of green transport, we are seeing high fuel costs and road charging pushing transport away from roads. Carbon emissions from road transport account for 24% of total, expected to rise 9% by 2010. But initiatives like London congestion charging are having an effect - bus usage is at its highest level since 1968 and growing. There are 70,000 fewer vehicle journeys into congestion zone and a 17% reduction in CO2 emissions.
 
We are playing this theme through companies such as Clean Air Power, which has a unique technology that converts heavy diesel engines into dual fuel engines. We also hold Maxwell, a US-based supplier of ultracapacitators, which increase engine and battery efficiency.

- ENDS -
 
 
Notes to editors:
 
 
1. The Stern Review was commissioned by the Cabinet Office and HM Treasury in July 2005 to understand more comprehensively the nature of the economic challenges and how they can be met, in the UK and globally.
 
2. "The links between ESG (environmental, social and governance) factors and financial performance are increasingly being recognized. On that basis, integrating ESG considerations into an investment analysis is clearly permissible and is arguably required in all jurisdictions,".
 
A Legal Framework for the Integration of Environmental, Social and Governance Issues into Institutional Investment was written by Freshfields partner Paul Watchman and published by the United Nations Environmental Program Finance Initiative.