Our parent firm, LPL Financial, is not necessarily known for promoting Socially Responsible Investments. But a recent article produced by their research team serves to highlight the true opportunity that SRI presents. In the same week Credit Suisse released a similar article regarding alternative energy. We are increasingly seeing investors and investment firms recognizing that the industries involved in sustainable practices also represent excellent investment return potential.
This research commentary, Cutting_The_Cord, provides details and insight into the rapidly changing alternative energy space. The piece begins by painting a picture of energy’s future. “Imagine a car that can drive from Miami to New York without refueling, the ability to power your home at night using energy collected by solar panels during the day, or even something as simple as a smartphone that can run for five days without charging. Advances in battery technology could make these and any number of other innovations possible in the future.”
As alternative sources continue to develop, the traditional energy sectors stand to suffer. This point is highlighted by both firms in their articles. The Credit Suisse commentary (Resolving_Energy_Storage ) states that “New energy will soon be more profitable than old energy.” Adding, “Alternative energy sources are becoming more efficient and as a result much cheaper. Returns from alternative sources of energy are as a consequence climbing quickly, while those of traditional power generation companies are declining.”
Additionally, the LPL Financial article acknowledges the social and sustainability impact of these innovations. “Outside of profits for properly positioned companies (which could be huge), this shift could be life-changing for people in areas of the world that don’t have a reliable power system. However you look at it, overcoming the drawbacks of current battery design has the potential to unleash massive improvements for our world, along with significant changes to economies and financial markets.”
At this point the SRI world contains mostly ethically motivated investors. But we are rapidly moving into an era where the lines between (if there were any) profits and values are fading. No matter what the motives are, investors should be considering companies and strategies that implement SRI principles if they want to be at the forefront of this growing trend.