Shares digital

It is time to review the G70 constitutes. Since we choose the inaugural members of the environment index in August 2007, a handful of new players have joined the stock market and several existing stocks proved to be worthy of inclusion. Alternative energy is a key attraction to investors and Greenko’s (GKO:AIM) float last November gave cause for excitement. It has biomass plants in India and is buying a few hydro plants this year as part of a wider acquisition strategy, making it a worthy addition to the G70 index.

Modern Water (MWG:AIM) is proving up water desalination technology. Its quest to turn waste and sea water into fresh water makes it an ideal participant for the index. Traction Technology (TRAC:AIM), another new addition, is developing hybrid vehicle engines and several bus operators are running tests on its alternative power packs.

Energy efficiency is becoming a vital part of the political agenda and Eaga (EAGA) is commissioned by the government to aid people in the home. Its task of helping to eradicate fuel poverty gets our approval to join the G70. We also introduce Bglobal (BGBL:AIM) to the index, on its energy efficiency activities. Smart meters will help people better manage their gas, electricity and water usage and reduce wastage. Radicle Projects (RDP:AIM) invests in forests and plantations and should eventually participate in carbon credit schemes. It is joined in the G70 by Landkom International (LKI:AIM), owner of farmland in the Ukraine where crops are partially used for biofuel.

Rather than increase the number of participants in the G70, the rules dictate that we must remove stocks to make way for the new members. We have had to make a tough decision over which companies to demote, prioritising companies that are on the verge of collapse or whose environmental activities are a minor part of their business.

The former applies to Compact Power (CPO:AIM), whose shares should be delisted later this month after the company went into administration in January. Carbon credit group AgCert (AGC) is also suspended following contract problems. While share trading may be revived, its future prospects look patchy, so we are removing it from the index. Degradable plastics group Symphony Environmental Technologies (SYM:AIM) continues to underperform and we are pulling the plug on its inclusion.

To make room for the new entrants, we have had to be ruthless and withdraw several support service groups. Waterman (WTM) is doing a good job advising on environment construction requirements, but this is not its main income stream. Fountains (FNT:AIM) has a few waste service contracts, just not enough to warrant its continued presence in the G70. Diploma’s (DPLM) life science business is too much of a distraction for the shares to be solely driven by its emissions monitoring and waste incineration arm. Likewise for consultancy RPS (RPS), its environmental management is mixed in with a host of other interests, including health and safety and gas infrastructure planning.