ANALYSIS: Lucrative Opportunities By Going Green

Dispatch from SSC Intern Nick Foster

Over the past few months, we have seen the stock market climbing its way back from its lowest point in a decade.  However, many people are still tentative to invest in particular sectors of the market and are careful not to spread their money across the board too thin.  Safe bets do not typically exist when investing, but that trend may soon change.

RCM – a subsidiary of Allianz Global Investors – stated that historical data illustrates that making investments in sustainable enterprises does not bring relative loss.  This finding contradicts the common misconception that investing in firms centered on sustainability underperform in a broader market.  Companies that manage environmental, social, and governance (ESG) risks, as well as follow environmental and social trends fall under the umbrella of sustainable investments.

Sustainability research analyst Barbara Evans of RCM claims:

It’s not about that XYZ companies are bad, but it’s more about what may be good.  If a company meets a certain criteria, potentially that may bring better performance.  Companies acting in a responsible way will be perhaps more sustainable in the future.
Even with the Matterhorn-like drop in the Dow from January through early March, the Dow Jones Sustainability Index has risen 29% since the beginning of the year.  

The worst of the storm may have passed over Wall Street. Yet, it is difficult to pinpoint which sectors are poised to finish strong in 2009 and continue to grow in 2010.  Even in these difficult economic times, investing in sustainable enterprises may be a wise choice.  It may not yield a substantial return immediately, but it may yield a few other benefits: good for people, good for the environment, and potentially good for your wallet.  
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