Resource-efficient companies are likely to grow more, face fewer risks and deliver better investment returns than less efficient companies, according to a new tracker launched by investment analysts today.
VIS Essential Investments, independent financial analysts focusing on natural resources, launched the index to identify companies that are “best placed” to generate long-term growth with lower environmental damage.
The index comprises more than 150 companies in the energy, food and water sectors listed on stock exchanges in OECD-area countries, including utility firms, food and beverage companies, equipment manufacturers and consumer goods businesses.
Since 1 January, the VIS energy, food and water (EFW) efficiency index has generated almost 6% higher returns compared to MSCI World Index, the global equity benchmark.
Benjamin Ergas, partner and co-founder of VIS said: “The use of natural resources by companies is the economic challenge of the future and, for the first time, the EFW index measures their efficiency and transforms it into an investment opportunity.”
Australian oil and gas company Woodside Petroleum ranked number one on the index, followed by Coca-Cola and baking multinational Grupo Bimbo.
The index uses data on water use, energy consumption and greenhouse-gas emissions for company operations and supply chains supplied by Trucost, which tracks natural capital data.
Richard Mattison, chief executive of Trucost, said that the index shows that supporting more resource-efficient companies makes good business sense for investors.
“Not only can investors generate higher returns with lower risks, they send a signal to the market that should encourage other listed companies to take action to minimize energy and water consumption,” he said.
