What is the importance of sustainability to investors?
Lars Kjellberg, Director of Credit Suisse Equity Research, and a prominent Paper & Packaging industry sell-side analyst, concludes that the investment community has thus far mostly focused on financial sustainability and less on ecological aspects.
“However, the investment community is starting to turn its attention to the business model of sustainability”, explains Kjellberg. “A much broader concept built on the merits of a product life-cycle analysis. The long term sustainability and economics of the business model are likely to become increasingly connected and Smurfit Kappa is well positioned with the vast majority of its raw material coming from a recycled source or renewable timber.”
“Near to medium term earnings and cash flow are still the most important criteria for investors according to Kjellberg. He continues: “The investment community looks at these variables in combination with the long term ability of a company to develop and grow its business and cash flow. Sustainability is of less importance to investors, than it is to customers who need to decide on packaging materials and solutions.”
Kjellberg believes this will change over time. “The environmental footprint for any product will become increasingly important. Partly because of the direct economic consequences like CO2 tax but also indirect consequences to businesses as, if there is a choice, consumers will progressively switch to using sustainable products. Corrugated products are well positioned to perform well in this respect due to their origin from renewable and recycled raw materials and because of the efficient and light weight impact on logistics.”