While the market for sustainable investment products is still quite new, it is not surprising that there is great demand for these products. As a case in point, the smaller sustainable products that True Blue Wealth has introduced during the last 6 months have all been oversubscribed by both individual investors and High Net Worth investors.

Sustainable investments are considered to be either in sustainable companies, in sustainable assets or in sustainable developments. A sustainable investment is one in which, according to the UN definition, economic, environmental and social factors are considered. True Blue goes further in its assessment of the products it promotes, with a 360 degree approach to consider all relevant stakeholders so investors will receive a solidly performing investment.

As an example, within the sustainable segment, renewable energy has an important role. The United Nations Economic Commission for Europe has estimated that the current size of the renewable energy market alone is around 160bn Euro and is expected to grow to at least 600bn Euro by 2020.

In addition, there is a very clear argument for sustainable products and companies. Generic statistics show that companies with a sustainable approach have both a longer term investment approach and have consistently outperformed the FTSE 250 average during the last 20 years.

Why do sustainable projects generate a better return? Well, certainly not all products, sustainable or not, generate a good return. However, if applied correctly it is easy to see why the benefits of a good sustainable project will exceed other projects.

First, sustainability means less or zero waste. With less waste, less costs. Sustainability means being cautious with excess and therefore cautious with costs. It means taking a longer term view and therefore the ability to be more flexible and think in more valuable business terms than short term thinking.

Sustainability means thinking how financially and in investment terms the project can be successful. This often means less debt and less risk. These are just a few reasons.

So the argument is clear. What about an actual projects? The below example shows the returns generated from a sustainable/renewable energy biomass project with simplified figures.

Land Purchase 1,000,000 Euro
Planning costs 350,000 Euro
Legal costs 50,000 Euro
DD costs 50,000 Euro
Other costs 50,000 Euro
Sales price 4m Euro
Return (40-15)/15 = 167%

This makes it clear that the correctly chosen sustainable projects can deliver excellent returns during the project lifetime as well as doing good. For most investors this is a powerful combination.

Hadley Barrett - Oxford Sustainable.