Growing public anger at plastic pollution in the world’s oceans and waterways is a good example of the trends driving returns for environmental investors, says Jon Forster of Impax Asset Management.
A clampdown in Europe and China is encouraging the development of plastics recycling facilities and also alternative packaging using fibre and biodegradable materials, Forster, co-manager of Impax Environmental Markets (IEM), explains.
In a video interview, Forster discusses how this is good news for companies like Tomra Systems (TOM.OL), the Norwegian recycling solutions provider which is the investment trust’s second biggest holding accounting for just over 3% of assets at the end of March.
Tomra shares recently hit a 17-year high after the British government announced it would introduce a deposit return scheme for single-use drinks containers this year. Tomra is a leading maker of reverse vending machines that enables people to recycle cans and bottles and receive money.
Forster, who has been an environmental investor for 18 years, says it is a great way of uncovering well-proven, growth businesses. ‘Usually when we sit down with investors they’ve never heard of any of the companies in our top 10 so there’s very little overlap for someone who’s holding broader funds,’ he says.
IEM has delivered a total return to shareholders of 137% in the past 10 years. The shares have risen just over 12% in the past year and currently trade at a relatively narrow 6% discount to net asset value.