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FAQ

SRI AND UTILITIES



Sustainable and socially responsible investing is growing rapidly, particularly in the United States.

According to the Forum for Sustainable and Responsible Investment (US SIF), SRI now encompasses $3.1 trillion or 12.2% of the U.S. investment marketplace. Another study by Robeco/Booz & Co. estimates that SRI assets under management will grow to over $9 trillion in the U.S. alone.

As SRI grows from niche to mainstream, we will see an evolution of definitions and investment criteria to include sectors and securities not traditionally associated with SRI.

It is our view that for many SRI fund charters, U.S. utilities – diligently analyzed and chosen based on their sustainability performance – will prove both a philosophical and financial fit.

  • As regulated monopolies, utilities are charged with balancing social, environmental and economic considerations – the three fundamental building blocks of sustainability.
  • Utilities have an abiding interest in supporting local and regional health and economic development, since those areas represent their core markets.
  • State and federal regulation promotes diligence in reporting and assures a high degree of transparency.
  • Utilities are conduits for the promotion of energy conservation and efficiency, as well as the development of alternative clean energy sources and smart grid infrastructure.
  • Utility earnings are largely asset based. The companies themselves have a social commitment to maintaining quality service through sustained investments in critical infrastructure. By their very nature, regulated asset-based earnings tend to be relatively stable over longer term horizons.
  • Utilities are highly focused on providing dividends at attractive and sustainable levels.
  • Many utilities are under-covered by securities analysts…the small and mid-caps in particular. Therefore, price discovery and liquidity are potentially hampered, creating potential long-term investment opportunities.
  • SRI funds under management could approach $9 trillion by 2015
  • Market capitalization of the TRA49 is approximately $440 billion