I spent most of Wednesday morning high up on the London Eye doing occasional broadcasts for the BBC on budget-related subjects. We were only on for a few minutes every hour or so, which left much time dangling in the air for me to argue with my fellow guests — an economist and a green campaigner — about Gordon Brown’s record, and in particular his greenness.
The green campaigner was all for taxes on big cars and on weekend trips to Marbella, the forced introduction of energy-saving light bulbs, general fiddling with Vat on green products, new insulation for all, and so on. Brown gave him pretty much what he wanted. But I can’t see how he can be pleased.
Why green taxes are largely pointless
If climate change really is the biggest challenge facing the planet (something Brown professes to believe) then what use is cutting the annual road tax on low-emission vehicles by a fiver, raising the road tax on the nation’s new 4x4s to £400 (when there are only 225,000 of them anyway) or setting up a £50m fund to save the rain forest? It just isn’t enough.
If you were cynical you might suspect that Brown wasn’t remotely concerned about global warming but just thought he should do a little fiddling to keep people such as my new friend quiet and, of course, to rake in a little extra cash on the side.
Good news, then, that where the government is falling down the private sector is stepping in. If you want to use your money to help cut carbon emissions around the world (which is the key: note the UK is responsible for only 2% of global emissions) there are plenty of ways to do so through the market. You can invest in bio-fuels, in fuel cells, waste management and water filtration, wind farms, emissions trading, carbon-credit creation, recycling or in companies making electric cars.
Green investments: environmentally-friendly vehicles
I’m guessing your money will make more difference to the long-term condition of the environment invested in the private sector like this than it will delivered to Brown’s pocket via his hotchpotch of green taxes.
So where are the best places for you and your conscience to put your cash right now? One to consider is Tanfield group, which produces a range of environment-friendly vehicles for businesses. Its newest vehicles have ranges of 120-130 miles between recharges and can go up to 50 mph, more than fast enough for most urban environments — which is where the company envisages them being used. Think internet home shopping and grocery delivery; food distribution; parcel, mail and logistics firms; and waste collection and recycling companies. They can all use Tanfield vans, and increasingly they are. Sainsbury’s uses them to distribute chilled foods for its online division and several other operators have them on order.
Last month the company also signed a “significant supply agreement” with M&S to replace some of the store chain’s diesel delivery fleet.
There is huge momentum behind this company – since December it has had no less than six bullish trading statements and the group’s sales of zero-emissions vehicles in the first half of 2006 were almost as high as sales for 2005. Yet the shares still look cheap: they trade on a price/earnings ratio of 15.5 times despite having forecast earnings growth of over 100%.
My next suggestion, Polymer Logistics, comes courtesy of Nigel Milton, of Investing for Growth, who pointed out its merits to me last week. Legislation and consumer pressure are forcing retailers to start proving their green credentials — one obvious driver behind the sales of Tanfield’s vehicles.
Green investments: ethical packaging firms
But the other area that most big firms need to tackle very publicly is packaging. M&S has said it intends to cut packaging waste by 25% and the other supermar-kets are bound to follow — if only to stop the green lobbyists encouraging do-gooders to rip off the packaging and dump it on the till. This is where Polymer comes in: it is, says Milton, “the right company, with the right project, at the right time”.
Goods are usually transported from wholesaler to retailer in boxes on wooden pallets, but this isn’t a particularly good way to do things: all the packing and unpacking is labour-intensive; the extra handling of the goods causes damage and wastage.
Most worryingly for retailers, with the EU after them with a new directive encouraging minimal packaging, there is endless waste of cardboard boxes. Polymer solves pretty much all these problems. Its products — mainly what it calls “retail-ready packaging” are designed to be used not just for transporting and storing goods but also for displaying them once they reach the shops.
Everything is stackable, reusable, cleanable and foldable. Clients — who can buy or rent the products — include Tesco, Asda, Sainsbury’s and Carre-four. House broker Collins Stew-art expects the company’s sales to double this calendar year, and the shares are on a very reasonable p/e ratio of 11 times.
Both these companies operate internationally, have very green credentials and offer excellent growth opportunities. I can think of many worse places to put your money.
First published in The Sunday Times 25/3/07