Could Brickworks (ASX:BKW) shares be a greener investment than first thought?

How does Brickworks stack up for environmentally conscious investors?

| More on:
a person with clipboard and pen assesses a crack in a brick wall, perhaps caused by an earth tremor.

Image source: Getty Images

When investors think ‘green’ or environmentally sustainable investments, Brickworks Limited (ASX: BKW) shares likely aren’t the first to come to mind. The 91-year-old company has evolved greatly over its tenure, though its core brickmaking operations have been carried all the way through.

Today, Brickworks operates 45 manufacturing plants, producing over 2,000 different brick and building products spanning 17 brands. With such large-scale operations, it may not come as a surprise that the company consumed 4.1 petajoules of energy (equivalent to 77,900 homes) in FY21.

However, as discussed at the ASX CEO Connect conference yesterday, the company has some green credentials.

Green ways of doing business

There are many companies on the ASX that are easily distinguishable as environmental, social, and governance (ESG) focused.

Such companies might include Australian technology company Calix Ltd (ASX: CXL), which is working on CO2 capture and battery tech. Another example might be Genex Power Ltd (ASX: GNX), which owns and develops renewable energy assets.

Alas, Brickworks shares would seem like an atypical inclusion among these green ASX-listed peers. Though, as managing director Lindsay Partridge pointed out at the ASX CEO Connect conference yesterday, bricks remain to be one of the most energy-efficient building materials.

Adding to this, Partridge stated that Brickworks’ bricks are carbon neutral after 9 months of installation. Considering that the clay bricks are guaranteed for 100 years, the product is attractive from a carbon-neutral perspective.

As such, the company foresees a strong demand for bricks, masonry, roof tiles, and precast in the future. Brickworks considers these materials as key enablers in achieving the United Nation’s sustainable development goal, “Make cities and human settlements inclusive, safe, resilient, and sustainable.”

Partridge also noted that Brickworks is using the spoil from the Brisbane Cross River rail project to make bricks.

These initiatives are building upon past work within the company to reduce its environmental footprint. According to its sustainability report, Brickworks’ Australian operations have decreased emissions by 39.9% since FY06.

Brickworks shares are greener in more ways than one

To the excitement of shareholders, Brickworks hasn’t broken the bank while implementing its environmental plans. Instead, Brickworks shares have stampeded upwards in recent years — providing great value to shareholders.

In the past year, the company’s shares have gained 22% (23.2% when including dividends). This is roughly in line with the S&P/ASX 200 Index (ASX: XJO) return of 19% (23.7% when including dividends). However, the difference begins to stand out when assessing from a longer time period.

Over the past three years, Brickworks shares have garnered a return of 36%. While the Aussie benchmark has delivered 22.3%.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

Motley Fool contributor Mitchell Lawler owns shares of Genex Power Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Brickworks. The Motley Fool Australia owns shares of and has recommended Brickworks. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Industrials Shares