Green Energy

Green Energy

Leading the Charge: Six Companies Revolutionizing Sustainable Housing

Leading the Charge: Six Companies Revolutionizing Sustainable Housing

Sustainable housing is critical as the sector contributes approximately 17% of global energy-related carbon dioxide emissions. This highlights the urgent need for innovative strategies to build, operate, and maintain more environmentally friendly structures. Stewart Investors, a leading active equity specialist in sustainable investing, has identified six global companies at the forefront of transforming the housing sector to embrace sustainability.

“As the need for housing continues to accelerate globally amid volatile climate conditions, finding solutions to building durable structures and reducing the sector’s carbon footprint takes on greater urgency,” said Clare Wood, portfolio specialist for Stewart Investors. “We believe that investing in companies that support environmentally conscious home building and maintenance will deliver strong returns to investors. These are companies that supply the industry in a variety of ways, and we believe they are positioned to participate materially in its evolution across market cycles.”

According to Stewart Investors, the following six companies (in alphabetical order in each of the three housing-related challenges identified) are contributing meaningfully to sustainable housing:

More Efficient and Sustainable Construction

Ashtead Group:  Ashtead is a U.K.-based equipment rental company.  Ashtead’s business model focuses on rental equipment for the global construction industry, reducing the need for the manufacturing of new equipment and extending the life of existing tools. A Stewart Investors holding since mid- 2024, Ashtead actively reduces its direct carbon footprint, effectively manages waste and water, and drives sustainable practices through its value chain.  With significant scale in a large and fragmented market, Ashtead’s cash flow has increased 10 percent annually over the past 10 years.

Nemetschek Group: Based in Germany, Nemetschek offers a broad portfolio of software solutions to the construction industry, focused on resource efficiency. Its use of Building Information Modelling (BIM) allows for more precise and efficient planning and construction, minimizing errors and reducing energy requirements. Nemetschek has been a Stewart Investors holding since late 2021. The company’s recurrent revenue represents more than 80 percent of total sales, which have risen by 11 percent a year over the five years ended Sept. 30, 2024.  Earnings per share have increased 8 percent yearly over that same period.

Resilience to Extreme Weather

Advanced Drainage Systems:  U.S.-based Advanced Drainage Systems (ADS) provides sustainable water management solutions that seek to safeguard the environment and build resiliency in communities. As storms increase in frequency and intensity, ADS’ water management solutions help reduce flooding, recharge aquifers, improve food security, and mitigate the risk of water scarcity. Given the inadequacy of existing water infrastructure and massive long-term expenditures needed to address the objectives of the U.S. Clean Water Act, ADS, a Stewart Investors holding since early 2023, is well positioned for continued growth. Its revenue has increased by 14 percent over the five years ended Sept. 30, 2024.

Simpson Manufacturing:  The products of U.S.-based Simpson seek to make homes and buildings more resilient. The company designs and manufactures products including moment frames, shearwalls, structural connectors, anchors, fasteners, and fiber-reinforced polymers to keep structures safe and strong. These products are increasingly important in the context of climate change and related climate events. Simpson, held by Stewart Investors since the third quarter of 2024, has increased revenue by 10 percent annually over the past 10 years. Stewart Investors believes the pent-up demand for housing and the aging of U.S. housing stock may provide ongoing catalysts for continued growth.

Energy Efficiency

TopBuild Corp.:  TopBuild, based in the U.S., installs and distributes insulation and building materials to the U.S. construction industry. Insulation is key to sustainable construction and more efficient energy use. A Stewart Investors holding since mid-2024, TopBuild seeks to unlock the full potential of insulation to improve energy efficiency. With 40 percent market share in the U.S. residential market, TopBuild’s revenue has risen by 15 percent and earnings per share by 30 percent yearly, respectively, over the five years ended Sept. 30, 2024.

Watsco, Inc.:  U.S.-based Watsco is the largest American distributor of air conditioning, heating and refrigeration equipment and related parts and supplies (HVAC/R). Its goal is to lead the transition to low carbon, high efficiency HVAC units and heat pumps for millions of homes and businesses within its markets. Stewart Investors has held Watsco since mid- 2022.  Watsco has increased revenue and earnings per share by 10 percent and 15 percent, respectively, over the five years ended Sept. 30, 2024.

 “At Stewart Investors, we have long held that sustainable outcomes and long-term profitability are two sides of the same coin,” Wood said. “These companies, and others in our portfolios, exemplify that investment thesis.”

Investors can find Stewart Investors’ holdings in its Portfolio Explorer tool, which details the investment team’s approach, identifies the companies held in the firm’s strategies, and explains how these stocks are contributing to sustainable development.

Launched in 2021, Portfolio Explorer was developed to help investors explore strategies, companies, countries and sustainability issues of interest in four views: map, human development pillars, climate solutions and sustainable development goals. Each of the four views contains relevant sub-categories.

The companies highlighted above were gathered from the larger universe of approximately 200 companies held across Stewart Investors’ emerging markets, regional and worldwide equity strategies.

Bridging the Net-Zero Gap: Why IDNOs Are Key for the UK Public Sector

Bridging the Net-Zero Gap: Why IDNOs Are Key for the UK Public Sector

With net-zero deadlines looming, the UK public sector faces a challenging paradox: ambitious targets paired with limited budgets. Despite these bold goals, many remain unaware of transformative tools like Independent Network Operators (IDNOs). At a recent Vattenfall Networks seminar, only one of 15 attendees had heard of IDNOs—despite their potential to accelerate green initiatives.

Councils and NHS trusts, tasked with leading the way in the Government’s Net Zero Strategy: Build Back Greener, are just beginning to recognize how IDNOs can offer cost-effective solutions for sustainable energy transitions. With government funding stretched thin, creative approaches like IDNO partnerships are becoming essential. Brent Council’s Francesca Campagnoli reflected on this knowledge gap: “This was all completely new to me.” As the stakes rise, introducing the public sector to the role of IDNOs is more urgent than ever.

The knowledge gap

This lack of familiarity with IDNOs isn’t just surprising—it’s a barrier. The Public Sector Decarbonisation Scheme (PSDS), which has allocated over £1 billion to assist public bodies in reducing emissions, has been crucial but still leaves funding gaps. Jacob Kupferberg, from Brent London Borough Council, highlighted these challenges: “The two main obstacles are governance and funding”. Limited resources and complex bureaucratic processes slow down decarbonisation efforts, while public scrutiny adds pressure to perform efficiently.

IDNOs like Vattenfall Networks are designed to bridge some of these gaps, offering a lifeline through both funding and project acceleration. Their Asset Adoption Value (AAV) payments, a concept new to most public sector organisations, can significantly reduce upfront infrastructure costs.  By reducing initial project expenses, AAV payments ease budgetary pressures, helping councils and trusts improve the economics of their electrification projects.

Suzanna Lashford, Head of Business Development at Vattenfall Networks, explained the rationale: “The public sector is under pressure to deliver ambitious net-zero goals with limited budgets. IDNOs can be the key to unlocking these projects, giving councils and NHS trusts the financial support to move forward with electrification”. With increasing emphasis on decentralisation and local accountability, as noted in the government’s Ten Point Plan for a Green Industrial Revolution, partnerships with IDNOs align with these goals by offering flexible, localised solutions.

From theory to practice: beyond funding

IDNOs offer more than just funding. They bring a streamlined, end-to-end approach to grid connections, which many organisations discovered could fast-track their projects. Francesca observed, “If IDNOs have priority on highway permits, it means they can perform grid connections more efficiently”. For councils managing time-sensitive projects, this competitive edge is a game-changer, particularly in urban regeneration or infrastructure-heavy initiatives where delays are common.

 

Severine Turgis from Central London Community Healthcare NHS Trust emphasised how IDNOs simplify project delivery: ” Understanding that IDNOs offer support beyond the infrastructure itself was a big plus. Knowing that they would assist with applications, facilitate processes, and not just ‘do the work’ makes it easier for me to convince my directors of their value. It gives us confidence that IDNOs are capable of delivering as promised, which is essential when making decisions at the executive level.”

For many, learning about IDNOs was eye-opening. Joy Olokpa, Carbon Zero Program Manager at Hammersmith and Fulham Council, valued IDNOs’ comprehensive support, noting that they could “relieve some of the burden on us by managing every step”. The Public Accounts Committee recently pointed to the need for better infrastructure management within the public sector, emphasising that streamlined processes and external expertise could enhance project efficiency. IDNOs, with their holistic approach, seem well-suited to meet these recommendations.

A call to action for the public sector

If public sector organisations are serious about meeting net-zero goals, IDNOs need to be part of the conversation. This starts with educating key stakeholders—energy managers, sustainability directors, and facilities teams—on the advantages IDNOs offer. The UK public sector is at a critical crossroads, balancing ambitious net-zero targets with tight budgets and limited awareness of key solutions. IDNOs present a promising path forward, offering both financial and operational support that can help councils and NHS trusts navigate the challenges ahead. It’s time for the public sector to recognize the value of IDNOs, unlocking a partnership that could prove vital to achieving a sustainable future.