It is a sector that is growing fast, driven initially by tightening regulations and climate change. For example in 2012 the US introduced a policy requiring 90% of all vehicles sold in the country to have fuel efficiency of 54 miles to the gallon by 2050, and the EU has set car manufacturers a target of a 50% reduction in emissions by 2021. This regulation is, in turn, catalysing innovation in the sector. Regulation is driving innovation Most major car manufacturers including Audi, BMW, Mercedes, Volkswagen and Toyota now all produce either hybrid or electric vehicles, and although electric cars currently only make up about 1-2% of the total market, demand is growing. In 2014 registrations for alternatively fuelled cars was up nearly 61% on 2013. This isn’t just better for the planet but it is also better for drivers, a recent study by Cambridge Econometrics estimated a switch to electric vehicles could save drivers up to £1,000 every year and reduce CO2 emissions by up to 47% by 2030. How can I get my investments on the sustainable transport road? Sustainable transport isn’t just about electric car-makers. Companies focused on improving fuel efficiency and battery life are also well placed to prosper. Research from WHEB Asset Management shows only 15% of energy from fuel is used to actually move the car and this has led them to US firm Johnson Controls. Johnson Controls, have developed ‘Start-Stop technologies’, which turn a car off when it is at a standstill and restarts it when the driver’s foot is removed from the brake, the introduction of this technology improves a vehicle’s fuel efficiency by 3-8%5. This is better for the environment and leads to good returns for investors. WHEB invest in Johnson Controls through their FP WHEB Sustainability fund which includes sustainable transport as one of its investment themes and last year returned 14.15% against its benchmark (MSCI World) which returned 11.32%.
|FP WHEB Sustainability A Acc in GB||-3.88||-4.32||5.33||14.15||44.83||33.36|
|Index MSCI World TR in GB||-3.00||-5.55||0.04||11.32||48.95||72.43||104.93|
|Environmental Markets Ord 10P TR in GB||-4.13||-3.74||3.61||4.03||65.70||46.63||103.78|
|Index MSCI World Small Cap TR in GB||-3.55||-5.40||2.62||11.54||54.87||87.06||23.45|