Green stocks beat the Footsie

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The Independent Online
"GREEN-CHIP" ethical investments are far outperforming other stocks and shares, even in the stock-market slump, according to latest figures.

At a United Nations meeting of more than 200 financiers, the Environment Minister, Michael Meacher, presented figures showing that an index of stocks of firms, chosen for their environmental and social responsibility, had consistently outstripped the FTSE All-Share Index during the long bull market, and done twice as well since prices began to fall precipitously this summer.

Similar measurements for Asia and the Pacific - where the crash has hit hard - show that ethical stocks actually increased in value over the past six weeks, while shares as a whole fell by nearly 10 per cent.

This startling evidence that virtue need not be its own reward was one example of self-interest pulling in the same direction as the interests of the planet, discussed at a conference on "Profitability and Responsibility in the 21st Century" held last week at Queen's College, Cambridge.

The meeting, organised by the United Nations Environment Programme (UNEP), heard of big business opportunities in fighting pollution, discounted loans and "green" mortgages - and how global warming could threaten banks' and insurance firms' survival.

About pounds 2bn is invested in ethical and environmental funds in Britain - more than twice as much as in the rest of Europe. The NPI Social Index, compiled by the City firm, NPI Asset Management, measures the performance of the 150 British firms "assessed as being the most effective in managing their environmental and social impact". To join it, companies must have a good record, stretching from products offering environmental benefits, to charity donations and profit-sharing for employees. Household names in the index include Boots, BT, Iceland, Sainsbury, NatWest and General Accident.

The figures show that cumulative returns from the Social Index companies have risen by more than three-and-a-half times this decade, bettering a threefold increase by the FTSE All-Share Index, and doing better on almost all measures of share prices and dividends. And since 1 July this year, the price of its shares has dropped by only 5 per cent - less than half of the 11.05 per cent fall in shares as a whole.

Mr Meacher told the conference: "Too often, financial managers see ... ethical investment as a niche market. But perhaps these ethical investors have something to teach the broader investment industry." A good record on the environment was increasingly viewed by analysts as a sign of a well-managed company. "Fund managers are looking for efficient environmental management. 'Green chips' are as significant as blue chips."

There were massive opportunities for investment and profit in a fast- rising market for green products that was already worth about pounds 280bn a year worldwide. There was also a lot to lose through pollution and climate change.

By last week, 115 banks and other financial institutions, and 78 insurance companies worldwide had signed a UNEP init-iative, promising to incorporate environmental concerns into every aspect of their businesses.

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