LOHAS — Opportunities for Ethical Investors

LOHAS — Opportunities for Ethical Investors

By Ron Robins

Investors who read this website are probably “Cultural Creatives” and “LOHAS” consumers. So this likely means you as well. Let me explain these terms and how they relate to your investments.

Cultural Creatives, becoming a major force, are also LOHAS consumers
In a previous editorial, I wrote about Cultural Creatives (CCs), and how they and their values will become a major force on the world scene in the decades ahead. Dr. Paul Ray and Sherry Ruth Anderson in their book on CCs, refer to them as caring “… deeply about ecology and saving the planet, about relationships, peace, and social justice, about self-actualization, spirituality, and self-expression.”

The lifestyle CCs espouse is encompassed in LOHAS – Lifestyles of Health and Sustainability. The term was coined by Natural Business Communications in the U.S. in the 1990s. It encapsulates a burgeoning marketplace of products and services, “… focused on health, the environment, social justice, personal development and sustainable living.” (From www.lohas.com.)

According to Dr. Ray, the percentage of adults in Western Europe and in the developed countries of the far-east who are CCs, and therefore LOHAS consumers, exceeds that of the U.S., where they are estimated at 19% of adults. The figure for Japan is around 30%.

Global LOHAS Markets probably total around $1 trillion
The U.S. LOHAS organization estimated the size of America’s LOHAS marketplace at $209.3 billion in 2005. It breaks-down as follows:

  • Personal Health: natural, organic products; nutritional products; integrative health care; dietary supplements; mind-body-spirit products = $118.03 billion
  • Green Building: home certification; energy star appliances; sustainable flooring; renewable energy systems; wood alternatives = $50 billion
  • Eco Tourism: eco-tourism travel; eco-adventure travel = $24.17 billion
  • Natural Lifestyles: indoor & outdoor furnishings; organic cleaning supplies; compact flourescent lights; social change philanthropy; apparel = $10.6 billion
  • Alternative Transportation: hybrid vehicles; biodiesel fuel; car sharing programs = $6.12 billion
  • Alternative Energy: renewable energy credits; green pricing = $380 million

Again, this data is for U.S. markets as they were in 2005. When you examine the market segments above, it is clear that in the three years since this data was published, many of these segments have experienced incredible growth. Since the U.S. represents around 20% of global consumption and most other affluent countries ahead of it in the development of LOHAS markets, world-wide LOHAS sales are possibly around $1 trillion.

Investment implications
But it is the young people in the developed countries who promise to further push LOHAS markets into the really big time in the next few years. Illustrating this point is a recent U.K. article reviewing a study of teen attitudes. The study found that, “65 per cent [of teens] said they will use their spending power to make a real difference in social and environmental issues… 85 per cent of teens felt they had the responsibility to ensure firms they might invest in did not harm the environment.” Incidentally, companies offering LOHAS goods and services may already be in many socially responsible, green, spiritual, or ethical investment portfolios. And the number of investors having such portfolios is growing rapidly.

The Ethical Investment Research Services, also of the U.K, says that there are, “almost three quarters of a million accounts in [U.K.] ethical funds, up from around 137,000 accounts in 1997.” In the U.S., “… from 2005 to 2007, SRI [Socially Responsible Investment] assets increased more than 18 percent [from $2.29 to $2.71 trillion] while all investment assets under management edged up by less than 3 percent.” (See: Social Investment Forum.)

As I indicated at the beginning of this editorial, most of you visiting this website are CCs and LOHAS consumers already. This puts you at a distinct advantage from ‘conventional′ investors as to having insight into the investment opportunities that are opening-up in LOHAS markets. You might like to review your values, insights and intuition concerning your investments in relation to the these markets. Then discuss them with your investment advisor to see what additional investment opportunities there are – and if they make financial sense for you.

June 3, 2008

© Ron Robins, 2008

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