Investors Warm to Climate Firms Seeking Efficiency, Osmosis Says
Osmosis Investment Management LLP said investors are more prepared to buy into riskier climate- related businesses that seek resource efficiency amid population growth and higher oil prices.
Osmosis tracks companies active in low-carbon services and technologies through the Osmosis Climate Solutions Index. The index is showing early signs of growth after underperforming in the past few years, said Benjamin Dear, a partner at the London- based investment management company.
The index gained 10.8 percent in January, bettering the MSCI World Index of global shares that rose 4.9 percent in the same month. Investor appetite for companies that use resources efficiently is being driven by rising middle-class consumption and higher fossil-fuel costs, Dear said.
This comes as renewable energy investments rose to a record $260 billion last year, boosted by a surge in solar developments, according to Bloomberg New Energy Finance, the London-based industry analyst. Solar stocks gained the most in a month on Feb. 9 on speculation that demand for panels will increase in China. The Bloomberg Global Leaders Solar Index (BLGS) of 37 companies jumped 4.6 percent, the most since Jan. 11.
“What we have seen in the last six months is sentiment changing to a more ‘risk-on’ environment for equities,” Dear said in a Feb. 10 interview.
“Investors are starting to look at this more closely. They’re seeing the businesses have a sensible business strategy and can operate withstanding the pressures on financial markets and governments,” he said. As some European governments cut clean energy subsidies to tackle austerity measures, businesses have restructured, emerging as well-managed companies, he said.
The Osmosis index follows 100 companies including Renewable Energy Corp ASA (REC), EDP Renovaveis SA and LDK Solar Co. in the renewables and low-carbon energy production, energy efficiency and water and waste management sectors.
Member companies generate more than 50 percent of revenue from products and solutions that help fight climate change or use natural resources efficiently.
To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net
To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net
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