Carbon-lite businesses prospering

Companies with relatively low carbon emissions have delivered better returns for investors on the NZX New Zealand sharemarket.

But a full analysis of the carbon footprints of the biggest 50 companies on the NZX was not possible as just under half did not publicly report their emissions, a report by investment advisory company Forsyth Barr said.

‘‘While several NZX companies provide excellent emissions disclosure, the general standard is mixed,’’ said Forsyth Barr’s head of research, Andy Bowley, in the Counting Carbon Costs report.

‘‘Many companies do not appear to currently measure their emissions; but plenty are planning to. In addition, reporting is not consistent, making comparisons difficult.’’

Companies singled out for praise on carbon reporting including Air New Zealand, dairy company Synlait, Fonterra, Z Energy, Contact Energy and Genesis Energy.

Companies yet to report on their emissions included Mainfreight and Steel & Tube.

‘‘Our analysis of the performance of companies with differing emissions profiles on different exchanges suggests that lower emitting companies have historically outperformed higher emitting companies over the longer term,’’ Bowley said.

‘‘Our analysis shows a similar relationship can be observed in international markets.

‘‘Emissions are clearly not the only driver of valuation; however, the broad relationship across different markets suggests investors are willing to pay more for low emitters.’’

Reasons for this could include an increasing number of pension funds, including Kiwisaver funds, shifting to become carbonaware investors.

Over the long term, heavy carbon emitters risked becoming ‘‘stranded assets’’ avoided by many investors.

Some companies, like oil and gas businesses, may also be at risk of being sued as a result of their impact on the climate, Bowley said.

Although NZX listing rules did not require carbon disclosure, there was a clear trend towards reporting emissions as investors increasingly sought more information, Bowley said.

However: ‘‘Some companies have a genuine desire to make planet Earth a better place.’’

Companies would also in time face higher carbon costs, but the financial impact on Nzx-listed businesses would be minimal for the foreseeable future, the report said.