Will sustainable investment compromise my returns?

Written by Rebecca O'Connor on 2nd October 2017

A viewpoint from Camilla Ritchie, Senior Investment Manager at 7IM

 

Blurred lines and electric cars

“The lines between ‘sustainable’ and ‘ethical’ can be quite blurry and funds in this sector come in all shades of green. I look at assets where the underlying companies, countries and institutions score well on social and environmental criteria, but it is important investors look at what rules the manager applies.

“Electric cars are perhaps a case in point. James Dyson announced last week that he expects to have an electric car in production by 2020. Whilst welcome news to urban dwellers suffering high levels of pollution from petrol and diesel cars, from my perspective there’s a bit more to it than that. If the electricity charging the batteries is generated by coal fired power stations, pollution is still happening – just in a different place.”

Ms Ritchie admits a particular fondness for the Renewable Energy Infrastructure investment company sector*. Holdings include Greencoat UK Wind, NextEnergy Solar, Foresight Solar, The Renewable Infrastructure Group and Bluefield Solar Income, which together account for almost 6 per cent of 7IM Sustainable Balance Fund’s portfolio.

Ms Ritchie says: “It’s been professionally and personally satisfying to watch the evolution of investment companies in the renewable energy infrastructure space, where spectacular growth in assets has come despite significant headwinds like changes in Government policy towards renewable energy and a fall in the oil price.

“This has come hand in hand with a substantial fall in installation and operational costs leading companies to look at how to approach the post subsidy era, with some beginning to look at the potential that battery storage might have for the ‘intermittent’ energy sector.”

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