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Why some are passing on Uber and Lyft

Reuters / Share:
The Uber and Lyft apps on an iPhone. Xinhua

BOSTON/SAN FRANCISCO (Reuters) – Some environmentally focused investors are not ready to buy into Lyft Inc or Uber Technologies Inc, worried about the climate impact of this year’s two most closely watched initial public offerings.

Both companies hope to push people away from car ownership and promote shared and sustainable transportation services, among their many ambitions that have already reshaped traffic in major US cities.

Lyft began trading on Friday and its larger rival Uber will kick off its IPO this month, though neither has shown itself to be profitable and shares of Lyft sank below their initial price of $72 on Monday.

Academics and city planners are still studying whether the companies will help reduce carbon emissions by making better use of existing vehicle fleets, or increase them by clogging traffic and diverting riders from trains and buses.

But even as the companies argue congestion has many causes including growing city populations, some investors cite early indications that ride-hailing technology puts more, not fewer, cars on the road.

“As far as I can tell, they’re actually putting more cars into the congested areas, and they’re pulling business out of the transit systems,” said Murray Rosenblith, portfolio manager of the New Alternatives Fund, which aims to make socially responsible investments.

“This is not an area where New Alternatives is going to get engaged,” Mr Rosenblith said.

Joshua Brockwell, a director at Azzad Asset Management, which also factors environmental issues into investment decisions, said both companies also face the issue of drivers “deadheading,” or driving around in between fares.

While both also aim to reduce private car ownership, he said, “that’s a not an eco-friendly goal in and of itself. It’s overall ‘miles travelled’ and carbon emissions that count.”

Representatives for several other well-known climate-focused investors said they do not buy IPOs or were not ready to weigh in on ride-hailing, including Green Century Funds, Boston Common Asset Management and Parnassus Investments.

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