Sarasin Sustainable Investment Guide 2009: Sustainable investments to benefit from stimulus packages
The huge additional funding provided by government support programs designed to kick-start the economy will act as a strong driver for the performance of sustainable investments in particular over the course of the year. Sustainable investors are well positioned to benefit from this trend, as they traditionally have a strong bias towards investments in infrastructure (e.g. energy, water, IT), which appears to be one of the main beneficiaries of the planned fiscal initiatives. Developments in the political arena – not least the election of Barack Obama as new US President – will also have a positive impact on the performance of sustainable investments. The agenda of the new US administration includes a number of important sustainability topics, such as climate change, renewable energy and energy efficiency, as well as health and education. Aside from the US, governments around the world are toying with the idea of using fiscal stimulus programmes to modernise and upgrade their infrastructure and bring it into line with new environmental standards.
Ethical standards are increasingly important
As the financial crisis has deepened, good corporate governance has become even more important to investors. Corporate scandals in times of high uncertainty can inevitably cause severe knock-on damage to company reputations. In this context, the topic of supply chain management is increasingly relevant. With a growing portion of the production process being outsourced to low-cost countries, critical issues such as labour rights, working conditions and environmental pollution need to be treated very seriously and monitored adequately at all times.
Sustainability is becoming even more relevant to investors
“One of the biggest advantages we see in conducting sustainability research on companies and countries and applying sustainability ratings to them is the fact that this highlights the critical nature and viability of their long-term business practices and subjects them to important public scrutiny,” comments Andreas Knoerzer, Head of Sustainable Investment at Bank Sarasin. “In times of economic hardship, when the relations between companies and their stakeholders are being tested, we expect the sustainability component of our investment style to become even more relevant to investors.”
Oil price forecast to average USD 100 per barrel in the period 2008 to 2015
The sharp fall in the oil price has negative consequences for sustainable investments in the energy sector for the time being. The investment case for many projects, which is based on the cost differential between the provision of renewable energy and fossil fuels, is being undermined by the low oil price at present. This development also explains why the investment themes of energy efficiency and renewable energy did not perform as well as expected during the past year. However, the International Energy Agency (IEA) forecasts that the oil price will average USD 100 per barrel (159 litres) between 2008 and 2015, and USD 122 thereafter. At the same time the IEA expects energy demand to rise by 50% until 2030, giving companies and consumers a major incentive to start searching for alternative energy sources again in the near future.
Investment theme ‘Water’: strong demand and government investment
Water is still a very promising investment theme. Here too, private sector investments in the water infrastructure will be encouraged by state economic stimulus packages. Governments are increasingly aware of the important role of an efficient water supply. In the emerging markets especially, there is an enormous demand for building new water infrastructure. The unstoppable growth of the world population, rising demand for agricultural products as well as insufficient fresh water supply remain the core drivers for this investment theme.
Sarasin – www.sarasin.com
The Sarasin Group has its roots as a leading Swiss private bank. As an international financial service provider committed to sustainability, the Group is now represented in 18 locations in Europe, the Middle East, and Asia. By end of June 2008 it managed total client assets of CHF 81.4 billion and employed around 1,300 staff. Its majority shareholder is the AAA-rated Dutch Rabobank.
Bank Sarasin & Co. Ltd – www.sarasin.ch
Bank Sarasin is a leading Swiss private bank whose many years of banking experience has made it consciously opt for sustainability as a key component of its corporate philosophy. It provides a high level of service and expertise when acting as investment advisor and asset manager for private and institutional clients. Within Switzerland, Sarasin has offices in Basel (head office), Geneva, Lugano, and Zurich. Bank Sarasin & Co. Ltd is listed on the SIX Swiss Exchange.
Bank Sarasin-Alpen (ME) Ltd – www.sarasin-alpen.com
Bank Sarasin-Alpen is incorporated as Bank Sarasin-Alpen (ME) Limited in Dubai, as Bank Sarasin-Alpen Qatar, LLC, in Qatar and as Sarasin-Alpen LLC, in Oman. These subsidiaries of Bank Sarasin, Basel, Switzerland provide the complete range of Bank Sarasin’s private banking services. In addition to UAE, Qatar and Oman, the bank caters to the requirements of private & institutional clients in the Middle East & South Asia.
