Corporate risks associated with nanotechnology could soon become a
significant socially responsible investment theme, the research firm
Innovest has declared.
The warning comes at a time when global investment in nanoscience is
booming, with BASF and General Electric among companies to the fore.
Research and development spending on nanotechnology – the manufacture
of objects built from individual atoms and molecules – was an estimated
$8.6billion (£5bn) last year, and nanotechnologies are predicted to
bring sales of $1trillion by 2015.
Innovest expects a flood of new nanotechnology products in the next
three to five years and warns companies involved to tread carefully to
avoid a consumer backlash similar to that against genetically modified
crops. To date, the health, safety and environmental risks are unclear.
Early studies suggest that some nanoparticles might damage living
organisms, and there are worries about toxicity. Innovest says public
awareness of nanotechnology is increasing, albeit slowly, and that one
warning signal for investors is a recent growth in interest among
pressure groups. Last year only four campaign groups were known to be
interested in nanoscience, but 16 NGOs, including Greenpeace, recently
contributed to a discussion document on the topic submitted to the US
Environmental Protection Agency.
‘Our advice to companies is twofold,’ said Heather Langsner, a senior
analyst with Innovest and author of a new study on the topic. ‘They
need to be transparent about the risks associated with nanotechnology
and quick to explain its benefits.’
Innovest also believes nanoscience is too closely focused at present on
improving existing products rather than developing socially beneficial
technologies. More research in areas such as clean water processes or
mechanisms for mass vaccination would allay public criticism and offer
clear business benefits, it says.
One company taking this route is General Electric, which is using
nanotechnology to create energy-efficient semiconductor diodes. Such
devices, which could one day be used in home lighting, are expected to
grow into a $1bn business by 2008. The US conglomerate is one of 15
large and small companies in a new Innovest list of nanotechnology best
practice.
Innovest’s study is one of the first signs of increased investor
interest in the topic as an SRI issue. Nanotechnology remains largely
off the agenda even for socially responsible funds, although UK-based
Jupiter and the German insurance group Allianz have both recently
produced analyses of the sector.
Innovest has expanded its research capability by acquiring from DNV
the non-solicited company ratings services of the research provider
CoreRatings. DNV is retaining the CoreRatings name and corporate
services business to focus on mandated corporate governance and
corporate responsibility ratings.
