Socially Responsible Utilities Continue to Outperform: Evidenced by Target Rock Utility Sustainability and ESG Indexes

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Target Rock Advisors, LLC (TRA) today released the first quarterly update of its ten energy utility industry Sustainability and ESG (Environmental, Social and Governance) Indexes, originally launched on February 14, 2012. The first quarter showed the continuation of a strong positive relationship between sustainability performance and stock market total returns.

Target Rock Advisors, LLC (TRA) today released the first quarterly update of its ten energy utility industry Sustainability and ESG (Environmental, Social and Governance) Indexes, originally launched on February 14, 2012.

The indexes include the equity securities of publicly-traded, U.S. domiciled energy utilities that were previously scored and ranked using the TRA sustainability assessment process, as described at

Richard Rudden, Target Rock’s CEO and co-founder stated, “The Target Rock family of indexes is designed to provide both socially responsible and traditional investors with utility sector specific performance metrics on the basis of which they can tailor their investment portfolios to meet both financial and social responsibility objectives.”

High Sustainability Index Continues to Outperform

“In the first quarter we saw the continuation of a very compelling long-term trend,” said Target Rock co-founder Kyle Rudden. “Specifically, the strong positive long-term relationship between sustainability performance and stock market total returns.”

Over the ten year period 12/31/01-12/31/11 the TRA High Sustainability Index substantially outperformed the TRA Medium Sustainability Index, which in turn outperformed the TRA Low Sustainability Index.

“This relationship is strongest over three, five, ten year periods. It doesn’t always hold up over shorter time periods. More often than not the TRA High Sustainability Index outperforms the other two but occasionally we’ll see some jockeying between the TRA Medium and TRA Low Sustainability Indexes as was the case this quarter” Rudden said.

The TRA High Sustainability Index posted a total return (actual, non-annualized) of 3.9% while the TRA Medium and TRA Low Sustainability Indexes came in at 0.1% and 2.2% respectively.

Rudden added “There were certainly other forces at work but a large part of the TRA Low Sustainability Index’s atypical performance was event driven. One of its components, CH Energy Group, Inc., posted a three-month total return of 12.9% primarily driven by a jump in price on the announcement of Fortis Inc.'s all-cash acquisition of CHG shares at a 10.5% premium to the market.”

The long-term relative relationship between sustainability and market performance is important but so too are absolute returns. Over ten years the TRA High Sustainability Index, which contains the top performers in overall sustainability, has outperformed all broad market indexes and all other major utility indexes.

In fact, all five TRA indexes that track the high performers in a particular sustainability area -- Overall Sustainability, Economics, Environmental, Social, and ESG -- have outperformed the broad market, and three out of the five have outperformed major established utility indexes.

“It’s important to bear in mind that on average the returns of these indexes are relatively lower risk and less volatile than broader market indexes and even the major established utility indexes, “Rudden added.

“The components of all our indexes are drawn from the TRA Composite Utility Index. For inclusion in that index, all U.S. based energy utility companies are screened for basic business mix and risk profile characteristics. Only those with more conservative, sustainable profiles are included in the Composite Index.

Thus all Target Rock index components are slightly more representative of more traditional, regulated, stable, dividend paying utilities than other established utility indexes which in some cases include lesser-regulated merchant generators and midstream natural gas companies.

Short-Term Performance

For the three month period 2/14/12-5/14/12 the top three performing TRA indexes based on total return were the TRA High Environmental Index (4.1%), the TRA High ESG Index (4.0%) and the TRA High Sustainability Index (3.9%).

None of the indexes were in negative total return territory for the period, though two were flat or essentially flat: The TRA Medium ESG Index was exactly flat at 0.0% and the TRA Medium Sustainability Index produced a total return of 0.1%.

More information is available in the report titled “Quarterly Sustainability Index Update: 2/14/12-5/14/12” at and information about Target Rock’s other utility sustainability rankings can be found at

About Target Rock

The indexes discussed in this release are one important component of Target Rock's products and services. Target Rock is dedicated to the rigorous study and implementation of sustainability policies and practices within the utility and financial industries. The Company’s mission is to provide data, information, analytical systems and deep sector-specific technical expertise that identifies areas for improved performance and helps utility companies achieve their sustainability objectives with favorable social and economic outcomes. Through its partners and associates, Target Rock has over 250 years of combined experience in sustainability and executive leadership, equities and fixed income analysis, financial management, statistics and econometrics, regulatory policy analysis and management consulting.

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