Financial greening of sustainability

by Lynn Stevens | Business Review Western Michigan

Friday May 16, 2008, 2:00 PM

AP PhotoWind turbines at the Harvest Wind Farm in Oliver Township compose the state's first commercial-scale wind farm that opened in January.

Is "green" likely to fade, or is it here to stay? Three trends point to permanence, according to Andrew Zeno, financial advisor in global wealth management at Merrill Lynch in Grand Rapids.

Zeno and Michael Pino, financial consultant for Centennial Securities Co. in Grand Rapids, jointly conducted a roundtable discussion on investing in sustainability at Business Review's "Michigan Leaders Speak" forum at Aquinas College May 15.

There is a genuine sense of corporate buy-in, Zeno said. For corporate decision makers, "it's not a question of 'should I pay attention to this?' but 'what can I do?'" he said.

To help them, there is institutional-level research into energy-efficient products and processes conducted by such companies as Deutsche Bank Group and Goldman Sachs. For the first time, those entities are seeing real investment opportunity in sustainability, Zeno said.

Second, investors now are looking for better reporting of a company's environmental record. They want sustainability reporting and financial results in the same document, he said.

"If I know a company is more efficient with its energy usage, that tells me they have intelligent management," Zeno said.

Finally, values-based investing is growing. Socially responsible investing used to mean screening out companies that deal in products or services that particular investors found objectionable. Now the definition is expanding to analyses of corporations' social responsibility. A large component of social responsibility is sustainability, he said.

Michael Pino pointed out some opportunities in specific industries. Solar energy is almost a mature industry, he said. But there are still opportunities to invest and profit from growth.

"Last year 80 percent of venture capital went into alternative energy," Pino said. "They see the future happening in this country very, very soon."
User prices for alternative energy of all types will come down in the next five to 10 years, Pino predicted.

It will take a huge investment of federal money to make alternative energy part of everyone's daily life -- an investment Japan and European countries already have made .

"Fluor (Corp.) is going to build a windfarm for Scottish Power Co. -- in this country," Zeno said. "We're going to catch up. And costs will come down."

"If there's money to be made, supply will come," Pino added.