This year could prove to be a favourable one for sustainable investments, thanks to an expected windfall from the fiscal stimulus packages launched by various governments worldwide, according to Bank Sarasin.
The huge additional funding provided by government support programmes designed to kick-start economies will act as a strong driver for the performance of sustainable investments in particular over the course of the year, Bank Sarasin says in a Sustainable Investment Guide.
"Sustainable investors are well-positioned to benefit from this trend, as they traditionally have a strong bias towards investments in infrastructure -- such as energy, water, and information technology -- which appears to be one of the main beneficiaries of the planned fiscal initiatives," the bank says.
Developments in the political arena -- not least the election of Barack Obama as the new US President -- is also expected to have a positive impact on the performance of sustainable investments.
The agenda of the new US administration includes a number of important sustainability topics, such as climate change, renewable energy and energy efficiency, as well as health and education, the bank says. Aside from the US, governments around the world are toying with the idea of using fiscal stimulus programmes to modernise and upgrade their infrastructure and bring it into line with new environmental standards, it adds.
Bank Sarasin notes the growing importance of ethical standards.
"As the financial crisis has deepened, good corporate governance has become even more important to investors. Corporate scandals in times of high uncertainty can inevitably cause severe knock-on damage to company reputations," the bank says. "In this context, the topic of supply chain management is increasingly relevant. With a growing portion of the production process being outsourced to low-cost countries, critical issues such as labour rights, working conditions and environmental pollution need to be treated very seriously and monitored adequately at all times."
Sustainability of investments is becoming even more relevant to investors, Bank Sarasin notes.
"One of the biggest advantages we see in conducting sustainability research on companies and countries and applying sustainability ratings to them is the fact that this highlights the critical nature and viability of their long-term business practices and subjects them to important public scrutiny," says Andreas Knoerzer, Switzerland-based head of sustainable investment at Bank Sarasin. "In times of economic hardship, when the relations between companies and their stakeholders are being tested, we expect the sustainability component of our investment style to become even more relevant to investors."
Bank Sarasin set up its sustainable research team in 1989 and is a major player in the sustainable investment market. In 1994, it launched the world's first-ever eco-efficiency fund. Today, its sustainable investment team is one of the largest in Europe.