NEW YORK, May 30, 2002 — Innovest Strategic Value Advisors Inc. has released a new 118-page report on the relative corporate environmental performance among 28 companies in the U.S. electric utility sector.
The analysis showed that environmental leaders, taken as a group, had a 10% average greater annual total shareholder return than that of the lower rated companies over the past three years. These findings are consistent with Innovest’s research in nearly every other sector. The analysis was conducted using Innovest’s EcoValue’21® environmental performance rating model. The model analyzes over 60 aspects of environmental risk exposure, management quality and business development.
Investor risk exposure related to environmental issues is growing in the electric utility sector as deregulation shifts responsibility for environmental costs from ratepayers to investors. Other factors raising investor risk exposure include increasing regulations, growing consumer demands for environmentally responsible products and services, increasing public concerns about global warming and other environmental problems, and expanding information transparency through the internet, which makes it easier for stakeholders to identify a firm’s negative impacts on the environment.
Innovest’s report extensively analyzes key environmental issues having the potential to impact investor returns, including the Bush Administration’s Clear Skies Initiative, public health studies detailing premature deaths from coal plant emissions, existing Clean Air Act provisions that will require emission reductions of as much as 75% over the next ten years, state regulations requiring reductions in carbon dioxide emissions, nuclear waste disposal, and strategic profit opportunities related to distributed generation, renewable energy and other areas. In addition, the report provides summaries of each firm’s relative risk exposure, management strategy and systems, and environmentally favorable business activities.
FPL Group and Pinnacle West Capital received the highest ratings in the sector. TECO Energy and Allegheny Energy received the lowest. Innovest’s report found that failure to proactively address environmental issues indicates the presence of less sophisticated management that will probably underperform the market. As the financial impact of environmental issues further increases in the electric utility sector, investors have the opportunity to increase returns and reduce risk by shifting investments from environmental laggards to leaders.
Innovest Strategic Value Advisors is an independent investment research firm specializing in environmental finance and investment opportunities. Innovest’s clients include the industrial companies and institutional investors throughout the world. For further information please visit the company’s website at http://www.innovestgroup.com .