Sustainable companies are on the up in Asia
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Sustainable companies are on the up in Asia

In Asia, environmental and social sustainability are proving to be important factors for businesses’ success. The country’s multitude of new middle class consumers are seeing infrastructure grow up around them – China has been pursuing urbanization at a staggering rate – and those cities are built to be as efficient as possible. In grappling with how to supply its countrymen with things like fresh water and reliable power supplies, corporate China has come to realize something that many powers in the west have been slow to recognize: sustainable solutions are usually more efficient – and therefore make better business sense – than the technologies they’re replacing.

Using less energy is good for the planet. But it’s also good for company’s energy bills – energy costs money, and sustainable solutions can reduce expenditure. Likewise, repairing leaking water infrastructure might cost money – but that money is compensated for by a reduction in wastage. Recycling, whether its plastic, cardboard, or anything else, obviously reduces expenditure when it comes to sourcing the base elements needed to make a pair of sneakers or supply a family with clean drinking water. Making sure the water really is clean cuts back on government healthcare costs and keeps productivity high, with fewer sick days away from work. 

A lot of the reluctance to sustainable technology comes from two factors: the first is the “tipping point” – in the west, a lot of people have been waiting decades for the point where the savings generated by sustainable technology outweigh the costs of implementing it (recycling old trainers only makes sense financially if the recycling process is cheaper than sourcing raw materials). The second is a result of pre-existing technology. In Asia, many sustainable technologies are being implemented from the get-go in new cities. In Europe or the U.S., we already have as much water infrastructure as we need – does replacing it justify the costs?

These are big questions that governments, businesses, and consumers have to answer for themselves. But investors should take note of which way the wind is blowing, particularly in China.

Beijing Enterprises Water Group won $7 billion in projects last year through a company joint venture. Beijing has set ambitious goals for the deployment of electric vehicles. And some of China’s biggest companies (think Tencent and its ilk) feature in Morningstar’s Asia-Pacific Sustainability Index.


The winds of change are blowing in the east – smart investors should consider being blown along by them.

Disclosure

Dominion holds a number of Asian companies which prioritise sustainability in its Global Trends Managed Fund, including Beijing Enterprises Water Group and Tencent amongst others.


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