The concept of green funerals (eco-friendly funerals) has seen a surge in interest in recent years, especially among younger generations, many of whom have shown a preference for traditional burials over emission-heavy cremations. And while funerals are a morbid topic that many of today’s young people seek not to discuss, I do think that the death care industry’s green shift will be unavoidable. For now, there aren’t any publicly-traded green funeral pure-plays for investors to bet on the trend. However, I do think that it’s just a matter of time before such an IPO lands on the public market.
At this juncture, eco-friendly funerals are in the very early innings of what I view as a multi-decade secular ascent. As demand for such so-called natural burials rises, several firms are bound to step up to the plate to swing at a business opportunity that could transform the industry for good.
The green funeral market is gaining traction. But don’t expect explosive gains anytime soon.
According to Virtue Market Research, the green funeral service market is expected to have a compound annual growth rate (CAGR) of around 11.6%. That’s some pretty respectable growth, to say the least. But I don’t expect the growth in green burials to peak anytime over the next two decades. Arguably, an inflection point could be hit at some point down the road, as calls for ESG-friendlier products and services grow louder while various firms become more willing to innovate.
Though it’s tough to tell when green burials will become the new norm, I do think that a number of problems need to be tackled before the concept hits the mainstream. Most notably, availability and affordability are two areas that need to be tackled before green burials begin to really take the market share of traditional burials and cremations. Of course, there’s a huge share-taking opportunity to be had, given that a vast majority of people who would be open to a greener funeral option had it been conveniently available.
In any case, the business of green funerals, while enjoying double-digit growth, won’t take the spot of traditional funeral services anytime soon. It’s still emerging, and while increased attention is promising, the real opportunity, I think, lies way into the future. As it stands today, there just aren’t as many green cemeteries to make it a convenient enough option. In a few decades down the road, though, look for the number of green cemeteries to really rocket higher, especially as emission minimization becomes a hotter topic.
How to invest in green funerals
As I mentioned previously, there isn’t a green funeral pure-play quite yet. But the big public firms are fully aware of the secular trend that probably won’t be going anywhere anytime soon. Notably, Service Corporation (NYSE:SCI | SCI Price Prediction) is a publicly traded funeral firm well-positioned to seize the opportunity once eco-friendly burial options transition to mainstream. The provider of funeral goods and services sells eco-friendly urns and caskets, as well as offering natural burial. However, for now, such green options seem to be a very tiny slice of the overall revenue pie. In short, eco-friendly funerals could expand rapidly in the next several decades. However, for now, there isn’t a massive pool of profits to be had in such a small market.
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