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?? Investors’ new friend: ESG trend
?? Climate change will be a “big deal” in 2021
?? Focus on companies from the EV or fuel cell sector
Investing in ESG (environmental, social and governance) has grown in importance over the past five years and has blossomed into a global megatrend, reports Yahoo! finance. This is a 30 trillion market that is also attracting the attention of major banks. In the Corona year 2020, the topic gained momentum. MSCI’s Linda-Eling Lee told CNBC, “We didn’t exactly expect this to be the year ESG really took off, but it has clearly drawn a lot of attention, both in terms of companies and what they are do from an ESG perspective [und] certainly from the point of view of capital flows. “Now the ESG trend is expected to have another big year in 2021, according to CNBC.
ESG investors turn their attention to climate change
The ideas of how sustainable or ESG-based investing work are very different – there are still no uniform guidelines and the understanding is often based on the subjective level of each individual. Kim Arthur from Main Management described ESG investing in an interview with the US broadcaster as “very unique and individual” – whether the lack of a standard definition, the focus of each customer would be different. “I think the best way to think about it is that you can add ESG to a number of different investment styles and approaches.”
Lee from MSCI suspects, however, that in 2021 there will be a particular focus on climate change, after all, this is an unavoidable phenomenon that we became aware once more with the pandemic year. “Despite all the limitations we’ve had this year, we’re still on our way to a world that climate science says will be too warm to sustain life as we know it.” The head of research at MSCI’s ESG research group has therefore announced that investors are turning their attention to this topic more and more and that they “will shift their capital into less carbon-intensive investments.”
Destruction of demand for oil & co .: boost for renewable energies
The pandemic has given the fossil fuel sector a major blow – part of that adulthood has been the temporary slide in oil prices. The demand for oil, gas and the like has suffered a significant slump. Instead, the switch from alternative energies from green sources such as solar and wind received a boost.
According to Yahoo! finance, a particular look should be taken at solar stocks. The solar sector, which is already gaining momentum, should shine even more brightly with the new US President Joe Biden. For one, Biden is expected to review tariffs and law that have so far harmed the solar industry. So far, this includes punitive tariffs on solar modules and inverters. If this is only partially abolished, this step could already bring about positive change. On the other hand, one of Biden’s promise is to redirect the subsidies on fossil fuels more or less to renewable energies – at least, however, a reduction in this should take place. The sector expects this to operate on the same terms as the traditional energy sector.
In addition, the recently adopted aid package in the USA provides a large amount of funding for renewable energies, including in the solar and wind industries. So, the industry could see rosy times, and stocks should continue their rally.
Electric cars an integral part of the ESG equity trend
The COVID-19 pandemic sometimes brought the auto industry to a standstill, but this did not stop the advance of electric car companies. The fact that electric vehicles (EV) are clearly part of the ESG trend can be seen from the sensational price rally by electric car manufacturer Tesla. The Chinese competitor NIO was also able to benefit from this run – both stocks gained massively in the past year and are apparently on other buy lists. Just like the stocks that are in the limelight, the papers from suppliers for such companies, including Workhouse Group, are also pulling along. But corporations like Facedrive should also be worth a look for ESG-interested investors: an Uber and Lyft competitor who strives to be environmentally friendly and plants trees for every trip to offset the carbon emissions for which it is responsible. In addition, the group, whose share also rose massively last year, wants to offer a modern alternative to car ownership with a subscription-based model.
Bloomberg New Energy Finance expects that 10 percent of newly purchased cars will be electric by 2025. Great Britain recently made a name for itself. When it was announced that the sale of gasoline-powered vehicles would be banned from 2030 – a measure that is the first in the world to date.
Political support: Hydrogen industry thrives
After years of neglectful treatment, the hydrogen industry experienced a real bloom of attention last year, which should continue: In June 2020, for example, the EU presented a new hydrogen strategy, which is intended to support companies in becoming carbon neutral by 2050. The US Department of Energy also announced investments in the hydrogen sector to support research projects.
The hydrogen trend is also catching on with energy suppliers. To show just a few examples: The domestic blue chip RWE occasionally writes on this topic on its website: “RWE is convinced that green hydrogen will be an important factor in the success of the energy transition alongside the further expansion of renewable energies. [
] That is why we are already actively participating in the development of a hydrogen economy – in Germany, but also beyond. “Energy giant NextEra Energy also announced plans to convert gas-fired power plants to run on hydrogen.
This trend around hydrogen naturally also benefits companies whose business specializes in fuel cells and everything that goes with them. Whether that’s NEL, Plug Power or Ballard Power, the shares of all three hydrogen companies climbed to new heights last year.
Overall, it can be seen that more and more companies that are involved in the energy transition or are campaigning for CO2 neutrality are attracting the focus of investors. Which sector investors rely on for the ESG trend is a matter of taste – and as the saying goes: “The trend is your friend.” However, other factors should be taken into account when choosing investments, because numerous share certificates relating to EV and hydrogen have already seen massive price rallies.
Finanzen.net editorial team
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