Who are the big polluters who will make money with the green. Bloomberg Report
Big polluters turning green could lead the next leg of the ESG rally. Bloomberg's analysis
Polluters looking to go green are pointed to by analysts and fund managers as the next companies that could attract billions of dollars thanks to ESG – Bloomberg writes.
Bank of America believes the best prospects include reforming companies that are currently major emitters of carbon dioxide in the energy, metals and mining industries.
The Biden administration's commitment to the environment and the European Union's green stimulus plan are spurring demand for more responsible investment as the world recovers from the Covid pandemic. About 86% of investors say climate change will be at the center of their policy or a major factor over the next two years, up from 33% two years ago, according to a Robeco poll.
The surge in ESG assets over the past year has pushed valuations into the stratosphere. The MSCI World ESG Leaders Index, which tracks more than 700 stocks selected for environmental, social and governance criteria, has jumped around 80% from its March 2020 low to a series of all-time highs. Its price-to-earnings ratio rose to 30.4, from just 14 in March last year.
The Bloomberg Barclays MSCI Global Green Bond Index, which is based on more than 600 ESG-compliant bonds, has jumped 11% over the past year, challenging a selloff in global debt markets.
“Over the past 12 months, the market returns have been very, very convincing,” said Arian Neiron, managing director and head of Asia Pacific in Sydney at VanEck, which oversees $ 50 billion globally. “They faded a bit with the technology complex and with the long part of the curve going off. We think it's an entry point, particularly into clean energy. ESG will be the standard ".
A DECADE OF OPPORTUNITIES
Bank of America also sees potential in companies moving towards climate improvement in the chemical, fertilizer and paint industries.
Companies that have set short-term emission reduction targets are more attractive because they have a plan of action and are undergoing change now, said Sameer Chopra, head of ESG research in Asia at Bank of America in Sydney.
Chopra said concerns about expensive valuations are premature. “Is it a bubble? No, not really. It sounds like a lot because it came from a very small base, big numbers are being made from a small base, but it's very early and we think this is another decade of opportunity to grow. "
Other money managers are more cautious after the price rally.
“As ESG demand grows, investors may need to be more aware of the potential risk of clustering around the ESG system,” said Guillaume Mascotto, head of ESG and investment management at American Century Investments in New York. "While these ESG-friendly activities have significant long-term potential, we believe caution is justified."
GREEN BONDS
The surge in ESG assets is not only moving equities, it is also making itself felt in fixed income.
Issuance of so-called green bonds, which raise funds for projects that provide environmental benefits, jumped to $ 111 billion in the first quarter, nearly three times from a year earlier, according to Calvert Research and Management of Washington.
"The pandemic has increased awareness of environmental, social and governance factors as social responsibility and impact factors, as well as financial performance, turning 2020 into a crucial year for responsible investing, especially in fixed income," they wrote. in a note Brian S. Ellis, fixed income portfolio manager and Henry Mason, research associate of ESG.
(Extract from the Epr press review)
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/inquinatori-aziende-asset-esg/ on Sun, 09 May 2021 06:18:07 +0000.