Energy Efficient Housing

Low carbon, or energy efficient housing, is an increasingly successful company strategy. In 2007, when our climate change strategy was first developed, there was little in the way of housing-related companies that had based their strategy on low energy housing. In 2012, that has changed, with a number of house-builders (Sekisui Chemical in Japan, Meritage Homes in the US) clearly outperforming their markets through a focus on best-in-class product.

Consumer awareness has moved to the point where additional investment in the housing product to achieve low energy use and integrated renewable generation, is able to be priced into the value of the home, as well as driving brand and product awareness. The savings to consumers are significant, as the information below from Meritage highlights.

Fig 1: Potential savings from energy efficient housing

Source: Meritage Homes

Meritage and Sekisui Chemical are both taking share within their respective markets as a result of clever early positioning of their housing product portfolios, and as a result have been good performers. We expect such competitive advantage to continue to pay off, and both stocks are core holdings in our portfolios.

Sekisui Chemical relative to MSCI World

Source: Datastream, as at 30 April 2012

Meritage Homes relative to MSCI World

Source: Datastream, as at 30 April 2012

This housing investment trend is also clearly evident among product and retailing suppliers to the industry. For instance, UK and France DIY retailer Kingfisher (B&Q in the UK), now has over 10% of annual sales from ‘eco’ housing products, up significantly over the last three years. In fact in the climate change fund we have significant exposure to energy efficient housing with Owens Corning, SIG, Honeywell, Home Depot and Lowes to name but a few. The solutions and services we are investing in are vast and many but we are firm believers that this is a strong and growing, sustainable trend in housing.