Common misconception is that green investment trusts invest heavily in renewable energy projects to generate dividends.
However, while green energy remains a substantial part of many portfolios’ investments, there is increasing investment for growth in companies working at the forefront of improving the environmental impacts of all industries, including fashion and semiconductors.
Renewcell in Sweden is an example of this company. Jupiter Green Investment Trust is also a recent investor.
Its technology tackles the hefty environmental impact of clothing, by taking old items and turning them into a new material to make clothes afresh.
Renewcell transforms factory offcuts into pulp, which can then be turned into textile fiber.
Jon Wallace managed Jupiter Green. He first invested in the company’s textile division last year.
Renewcell was created by scientists from the Royal Institute of Technology, Stockholm.
The scale-up’s technology dissolves material like worn out jeans and production scraps into a biodegradable pulp which is then turned into textile fibre.
Circulose is a patent-pending material that’s used for making new clothing.
This material offers ‘huge climate benefits because it tackles the need to produce virgin fibres, via processes that can be hugely polluting through the use of chemicals and resource intensive – through the use of water, energy, and, for cotton production, land,’ says Jupiter Green’s Wallace.
It is already making an impact on the industry, working with high street brand H&M, which invested in Renewcell in 2017 and holds 10 per cent equity in the company, and denim brand Levi’s.
Renewcell’s patented material Circulose is used to make new clothes
The maximum annual production is only 60,000 tonnes, which is quite small.
But a €30.75million loan from the European Investment Bank will reportedly be used to build Renewcell’s first full commercial scale textile plant.
Wallace says: ‘Renewcell is currently the only commercial scale recycler of clothing material in an industry which currently employs some very unsustainable practices – for example, when luxury fashion brands burn swathes of unsold stock, something that has gained negative press attention recently.’
It fits well into Jupiter Green’s diverse portfolio, which looks to invest in environmental solutions across infrastructure, resource efficiency and demographics.
Jupiter Green is one of just three trusts in the Association of Investment Companies’ (AIC) environmental sectors. The sector has performed slightly below its peers and it returned 33.5%, 76.4%, and 88.1% in the last year respectively, as well as an average return of 33.5 percent, 76.4%, and 5 years, respectively.
Jupiter Green is currently trading at a discount to net asset values of 1.73 percent. Jupiter Green also has relatively high ongoing costs of 1.76% due to their specialist nature and small size.
Charlie Thomas left Jupiter Green earlier in the year and Charlie Thomas was replaced by Wallace as his manager. Wallace, who has worked at the trust seven years, has an environmental technology background.
Jupiter Green invests also in Evoqua, which protects water supplies from “forever chemicals”.
Chemicals found in nonstick saucepans: How to combat them forever
Among his other top picks in the portfolio are manufacturer Monolithic Power, First Solar and Evoqua, a ‘water technology’ company.
Evoqua, a company with a small to mid-cap size that provides wastewater treatment and water quality services, is listed on the New York Stock Exchange.
It has operations in 10 countries (including the US, Canada and India) and reports a $1.4billion revenue last year.
Among its aims is tackling ‘forever chemicals’ such as Polyfluroalkyl substances (PFAS), which are found in fast-food wrappers, non-stick cookware and stain-resistant fabrics.
These substances’ bonds can take many decades to dissolve and they have begun to build up in rivers, lakes and wells. This poses a threat to biodiversity.
It aligns with the UN’s Sustainable Development Goals not just on clean water and sanitation, but also on health and wellness and renewable energy.
Evoqua says its digesting technology systems produce sufficient renewable energy to power the equivalent of 55,000 American homes each day.
‘While finding substitutes for PFAS is a focus for environmental solutions investors, so too is tackling the PFAS already in our environment. Evoqua provides effective water treatment for PFAS and other emerging contaminants,’ says Wallace.
First Solar manufactures, sells and designs solar panels. Recently, they have launched two additional factories.
Energy efficiency is improving at the semiconductor company
Monolithic Power is another US listed company in Jupiter Green’s portfolio. It is a semiconductor company which doesn’t seem an obvious sustainable choice, but its efforts are almost entirely focused on energy efficiency, from computer servers to LED lighting.
Wallace says: ‘Monolithic’s technology is already used in the automotive and computing industries, but the potential for adoption in other areas is huge, particularly with the renewed push to decarbonise the US economy.’
Monolithic is doing well in this year’s year. Its shares have risen nearly 50% year-to date despite having a difficult start due to shortage of semiconductor chip and the escalating demand.
Wallace also mentions First Solar that designs, produces, and sells solar panels.
The solar industry is growing at a rapid rate, driven by its cost effectiveness amidst a backdrop of rising fuel prices, and the Biden administration’s focus on clean energy in the US market.
First Solar is one of the largest companies in this industry. They recently opened two manufacturing facilities in India and Ohio.
Its unique selling point is that it doesn’t use polysilicon-based technology,’ says Wallace.
‘Polysilicons have been linked to forced labour in certain regions, so we think First Solar is an attractive proposition in clean energy markets where project developers and their partners – many of whom are well-known companies wishing to own the clean energy produced on long-term contracts – clearly wish to avoid indirect exposure to this controversy.’