Thoughts From the Road
Research Round-Up
Every Thursday, your editors hash out what we consider the top sustainability stories to figure out what – if any – they mean for financial markets and the world. Our Research Round-ups aim to capture our debate of sustainability news, fun facts, and market insights.
Today’s round-up discusses:
The corporate scramble for clean electricity
The state of ESG
Thoughts From the Road: The Corporate Scramble for Clean Electricity
This week, your editors have been busy meeting with clients, prospects and contacts in Boston and New York. These trips prove invaluable to understanding key investment topics and issues in sustainability. The most common inquiry was about the budding corporate scramble to acquire clean electricity sources.
Companies, particularly big tech with its energy-intensive data centres and AI, aspire to expand their businesses AND be fueled by clean energy in order to deliver on net-zero promises. Until recently, many firms were relying on carbon offsets to reduce their carbon footprint, but this practice has (thankfully) dropped out of favour following credibility concerns: many voluntary carbon offset projects have been shown to either underdeliver or be outright fraudulent. In other words, the “easy” route to net-zero is hitting roadblocks and companies with net-zero commitments need to find other ways to get there.
In a previous research round-up, we wrote of the expected explosion in new electricity demand over the next decade. Our recent conversations with investors and stakeholders affirm this view: the additional energy needs from AI and datacentre demand is leaving companies struggling to secure clean energy. One of our top calls for this year and beyond has been to invest in companies that are building the grid (transmission and distribution) which will be crucial in meeting the surging energy demand with cleaner sources. Our discussions this week have added extra resolve.
Thoughts From the Road: The State of ESG
While meeting with prospects and clients this week, the “state of ESG” was another popular topic of discussion. There seems to be a strong consensus that within five years, the term “ESG investing” will largely be replaced. Our impression is that various stakeholders in the investment industry better understand the role and importance of ESG integration from a risk management perspective, which differs from alpha generation based on sustainability trends and/or aiming to create real-world, non-financial impact via investment allocation
Moreover, there has been a distinct drop off in discussion about SDGs, which we welcome. Many investors seem willing to find a silver lining in the current “anti-ESG” political climate; a certain weeding out of greenwashers was necessary. A more focused concentration on tying sustainability issues to investment returns is a positive development.
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