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The Greenest Companies Consistently Outperform Markets

wong, derek, carbon49Apple, BMW, LG, HP, Coca-Cola, and Walmart are among the 187 companies cited by non-profit Carbon Disclosure Project for doing the most to combat climate change. These green warriors also outperform the Bloomberg World Index. Five Canadian companies made this elite group. I find out how their stock prices compare to the S&P/TSX Index.

The recently released CDP 2014 report is covered by media around the world but, sadly, passed by all major Canadian publications. I find informative coverage by Bloomberg, Forbes, and CNBC. A few key quotes:

  • Bloomberg: “If acting on climate change hurts the economy, as the American Coal Council’s talking points suggest, it’s a lesson lost on some of the world’s most successful companies. Stocks of companies that take climate change seriously beat the wider market by almost 10 percent …
  • Forbes: “True leaders in the field are using their sustainability information to become stronger businesses and to make better decisions based on what they have learned. They understand that analysing, reporting and benchmarking the data they have gathered can help to boost revenues, strengthen brands, cut costs and manage risks.
  • CNBC: “It’s the companies that are not yet able to report that are telling their investors ‘we’re not prepared for this issue and we may be exposed to this risk and we’re probably not gaining on the opportunity side.’”

What is notable is how these companies who invest heavily in combating climate change are doing for their shareholders. As I wrote in The State of Impact Investing in 2013, “some investors and investment managers think impact investing means giving up profits and from a fiduciary point of view they are not allowed to do that.” But time after time, data show green companies actually delivered market-beating financial returns. (Impact Investing means investing in companies that do social and environmental good in addition to generating financial return.)

The stock prices of global green business leaders beat the market. The 187 CDP “A List” companies’ stock prices as a group outperformed the Bloomberg World Index by 9.6% in the four year period from 2010, according to CDP. The A-Listers’ stocks went up 37.53% while the Bloomberg World Index went up 34.24% in the same period.

When a similar analysis was done by the CDP in 2011 for the period 2005 to 2011, the results were even more dramatic. As I wrote in CDP Canada 2011: Key Highlights, “Businesses who lead in carbon performance delivered twice the financial return compared to their peers. Companies in the Carbon Disclosure Leadership Index (CDLI) and Carbon Performance Leadership Index (CPLI) delivered approximately double the total return of Global 500 companies between January 2005 and May 2011.

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2 thoughts on “The Greenest Companies Consistently Outperform Markets

  1. @Ken I actually don’t find Canadian newspapers very good at reporting environmental issues. They would report a Canadian focused issue. But for global issues with a Canadian component, such as the case of this CDP global report with 5 Canadian companies mentioned, the Canadian media tend to ignore it.

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