Author: Dr David Owen, Publication: Professional Investor April 1994
A quarter of a century ago, investors were beginning to pay attention to environmental factors for the first time. As David Owen pointed out in his April 1994 article, there were more than 100 ‘pure play’ environmental equities on offer in the US by 1994, and ‘green’ parties had made traction in European elections. The world was walking up to climate change. but there was still a great deal for the industry, and for investors, to learn.
The ‘green’ label was being attached to many stocks in the hopes that they would gain an environmental premium, for instance. But investors still needed guidance on how to access the right opportunities, which seemed to be limited to equities. There were many debates on how to measure progress in the sector, and how to undertake fundamental analysis, as well as how best to adopt a long-term view.
At a time when climate change brings its own urgency, it is interesting to look back at some of the challenges that industry professionals needed to address 25 years ago. A great deal has changed since, with ESG becoming an issue no investor or industry professional can afford to ignore. But some of the challenges remain the same.