New York, NY, Jan. 25, 2006 — Innovest Strategic Value Advisors Inc. (ISVA) released its new electric power industry report covering the largest publicly traded electric power companies in the U.S.
The Innovest analysis indicates that companies that take positive and proactive measures to address environmental, social, and governance factors (ESG) can capture significant benefits for shareholders. In line with this, Innovest found that the half of this group of electric power companies with better ESG ratings outperformed, on average, their below-average industry peers by 1700 basis points (or 17 percentage points) in total shareholder return (stock price appreciation plus dividends) over the over the past 3 years from November 2003 to November 2005.
Additionally, Innovest’s results show that electric power companies with better environmental performance consistently outperformed laggards financially during the last seven years.
Although electric power producers are, on average, highly exposed to ESG factors, Innovest identified wide variations in exposure and management strategies with the potential to affect shareholder value in this industry. FPL Group (FPL) and Pinnacle West Capital (PNW) received the highest ESG ratings, while Allegheny Energy (AYE) and First Energy (FE) received the lowest. The implications of these ratings will increase as managers continue to improve their corporate ESG performance.
Innovest’s findings highlight non-traditional sources of investment risks and out-performance, giving investors a different insight into factors that could enhance companies’ corporate value.