Carbon Clean 200: Greener businesses rule, conclude investment analysts

Investment returns on firms driving the transition to a green market are readily outstripping those of their fossil fuel opponents, new analysis suggests, adding to mounting evidence of a hastening investor switch away from carbon intensive assets.

A group of 200 publicly traded’carbon clean’ companies has outperformed its fossil fuel counterpart by a factor of four since launching in July 2016, the data shows.

The analysis stems in the sixth upgrade on the operation of the Carbon Clean 200, a list of 200 firms which are spearheading the journey towards a clean energy future.

The Carbon Clean 200 was compiled by campaign teams As You Sow and Corporate Knights at July 2016. Between then and 31 January 2020, the Clean 200 easily outperformed the MSCI ACWI Global Energy Index, using a yield of 29.58 per cent compared to 6.68 per cent.

“In 2016 people were saying,’when we divest fossil fuels there’s nothing to invest in’,” remembered Andrew Behar, CEO of As You Sow and report co-author. “We created the Clean200 to show investors around the world that the clean energy future is actually the clean energy present. Since then, we have been tracking and sharing the emergence of this economic paradigm. Clearly there are a broad spectrum of companies making the transformation that is our greatest hope to control climate change a reality.”

The 10 top-performing Clean200 companies by absolute earnings earned from low-carbon products and providers include: Taiwan Semiconductor Manufacturing Co Ltd, Alphabet Inc, Siemens AG, Toyota Motor Corp, HP Inc, Iberdrola SA, Cisco Systems Inc, Tesla Inc, Schneider Electric SE, along with Unilever PLC..

The Clean200 utilizes the Corporate Knights Clean Revenue database, which monitors the proportion of earnings companies earn from clean market themes such as energy efficiency; green energy generation; electric vehicles; banks financing low-carbon options; real estate firms concentrated on low-carbon buildings; forestry companies protecting carbon dioxide; responsible miners of crucial materials for the low-carbon market; apparel and food companies with goods primarily made of raw materials using a considerably lower carbon footprint; and Information and Communications Technology (ICT) companies which are leading the way on renewable energy while also being best-in-sector according to currently approved solitude benchmarks.

Some of the world’s most important investors have lately signalled aims to curb capital flows. Since the start of this calendar year, Lloyd’s and BlackRock have introduced measures which will limit investments, while Barclays is considering a similar move. Today RBS announced that it would quit lending to firms that lack a plausible climate plan and intended to phase out coal financing by 2030.

Part of the shift will be driven by pressure from regulators, investors, and the public, in addition to concerns that carbon businesses hazard getting stranded assets. But at precisely the same time the body of academic work researching why and how greener businesses outperform the industry is expanding all the time, providing additional evidence that so-called ecological, societal, governance (ESG) investment plans deliver more attractive and steady returns. Meanwhile, the disruption caused by the energy transition has seen valuations for energy utilities in adult markets plummet, since they’re made to retire carbon assets premature and increase investment in new technology.

A similar recent evaluation in the investor-backed CDP group highlighted how the cohort of firms that provide the most complete climate disclosures and government measures and therefore make its yearly A-List outperformed their competitors on the stock exchange by an yearly average of 5.5 per cent over a seven-year interval, according to the STOXX Climate Leaders Index. Equally, a year’s Carbon Clean 200 showed how because 2016 Clean200 firms enjoyed an average 1.29 per cent increase in value, outperforming the S&P Global 1200 energy indicator at -2.49 per cent. 

Advocates of greener business practices have argued that the combination of governance, risk management, efficacy, and standing that comes from pursuing sustainability chances and practices inherently helps induce improved performance. They have plenty of data to draw back up their hypothesis. 

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