Alphabet and Sustainability

Is Alphabet a Sustainable Company and a Sustainable Investment?


One more company to always keep in mind when thinking about sustainability and investing is Google, or what is now usually known as Alphabet.  

Notice the play on words - alpha, bet - the company appears to be suggesting even its name alone that it is a bet on future outperformance.

Much like our previous article on Apple, buying and holding a company like Alphabet for the long term seems like a pretty good idea.

Apple is up roughly 500% since we first chose it for our sustainable portfolio in late 2009 and the idea then remains as it is now, ​to find the companies who you trust most to innovate our way out of environmental challenges such as climate change.

Google, for example, has it's "Google X semi-secret labs," where they are working on everything from driverless cars to a wind company called Makani Power which makes airborne wind turbines of all things.

Google is also moving into the energy space with tools for utilities, and some see Google itself becoming an electric utility. I don't know about you but that idea excites me.  Local, antiquated,government regulated utilities are suffering financially, not just in the US, where they are in the way of more local, distributed energy, but also in Europe, where the largest utilities have largely lost their financial way.

The future of energy needs fresh thinking and committed solutions, so this may well be another trend.

You can get a more of a sense for Google's energy investments here. Investing in the future is what sustainable investing is all about.

One major trend of recent times has been the virtual disappearance of entire sectors such as Publishing (perhaps we aren't helping by writing articles such as this for internet only consumption, but I digress...).

 Apple seems to transcend industries, now talking and acting on becoming an electric car manufacturer.  For these cars to truly change the face of transportation, they will need infrastructure and new sources of lower carbon energy, perhaps from companies like Google.

Google Earth may seem only just another online map, but it also allows users to check on countries who claim to be stopping deforestation.  A recent  Google @ Yale event demonstrated the power of combining research and environmental goals. This piece from today goes further to demonstrate the utility of this technique as regards Global Forest Watch.

This may sound odd, but Google has also pushed the research envelope on ideas such as space elevators, hoverboards, teleportation devices, life extension techniques and more.  Even if they don't always succeed or make it to market, Google clearly has an appetite to create and innovate and given the world's challenges on pollution, fresh water, deforestation, biodiversity, carbon emissions and so much more, a company that finds a key solution will be handsomely rewarded financially by markets.

Where will Google go from here? They opened their first store. If that works anything as well as it did for Apple, well, shareholders will be very happy indeed.

What about the fact that Google split their stock?  Some think of that as bad corporate governance. Actually, its a good thing. Not only have studies shown that Swiss companies with split shares outperform, with activists pressuring companies to give cash back to shareholders, I'd rather trust Google to invest that cash in future innovations (as long as it actually does so).  

Public companies have US$2T in cash just sitting around. That's an investment opportunity unto itself and helps lock in a minimum share price on book value alone. Yes, Google hasn't been paying enough taxes, but that's not really their fault if the rules allow them to.  

Google can make up for this sin by curing the world's environmental ills. Lower carbon wind energy at scale anyone, with a side of dividends? Yes, please.

This is exactly what we have long advocated in our articles and books when we talk about positive, opportunity-focused sustainable investing, which has already been an outperforming strategy. More please, much more.