The trend for ‘green buildings’ has emerged as a core theme within the Kames Global Sustainable Equity fund via its bottom up stock selection process, says the fund’s co-manager Craig Bonthron.
A green building is one which is environmentally sustainable; designed, constructed and/or operated to minimise its total environmental impact. In practise, considerations as to whether a building is ‘green’ may include its energy use, water use, indoor environmental quality, material selection or its impact on its site.
Bonthron says, “Globally there are supportive emissions regulations and CO² reduction targets – not to mention economic benefits and societal demands to reduce pollution. New and existing buildings in both commercial and residential markets are also becoming cleaner and more energy efficient and we have identified a few businesses globally that are taking advantage of this via a combination of their strong products offerings and first class distribution strategies.”
Below Bonthron identifies three stocks benefitting from this ‘green buildings’ trend:
Kingspan – Insulation panels
“Kingspan is an Irish company that specialises in high performance insulated panels for commercial and residential buildings. Although a relatively small company globally, it has been successfully expanding and gaining market share in Europe and the US. A combination of market leading products, good distribution and expansion through acquisitions in new markets have been the drivers of its success.”
Acuity Brands – LED lighting
“Acuity Brands is a leading provider of LED lighting solutions for the US commercial new construction and renovation markets. A combination of its excellent product range – aimed at lighting designers and architects – and its market leading distribution through specialist agents has led to excellent growth for the company. Interestingly, its offering integrates technology to enable ‘internet of things’ solutions where buildings become smarter and devices and systems communicate to drive increased efficiency. This is key to its total solutions offering.”
A.O. Smith – Boilers and filtration
“A.O Smith is a leading manufacturer of boilers, air filters and water filters. Again, excellent product innovation combined with first class distribution has led to strong growth. Boilers are typically the second largest user of household energy and clean air and water are vital. Recent lead poisoning controversies in Flint, Michigan has led to increased scrutiny on water quality in the US and A.O Smith has leveraged its distribution and product innovation to take advantage of this demand. Air and water pollution in China are huge local issues that A.O Smith solves. Crucially though, its ability to profitably benefit from this demand is ultimately due to forward thinking investment which has given it local distribution and brand presence in China for over 20 years.”