Amid the backdrop of a world grappling with climate change and an onslaught of natural disasters, the realm of ESG (Environmental, Social, and Governance) investing is under the spotlight. The topic was recently brought to life on September 5th in a captivating discussion on “Marketplace Morning Report.” Rich Nuzum, the global chief investment strategist at Mercer, offered insights that shed light on the current state of ESG investments, alluding to a shifting landscape that’s both intriguing and relevant to business owners [1].
In a world increasingly marked by climate change and devastating natural disasters, the need for sustainable and environmentally conscious investments has never been more apparent [1]. The principles of ESG (Environmental, Social, and Governance) investing have risen to the forefront of discussions among investors, corporations, and policymakers alike. ESG investing involves considering a company’s environmental practices, social impact, and governance structure when making investment decisions. It’s a way for investors to not only seek financial returns but also promote positive change in the world.
On September 5th, the Marketplace Morning Report brought this pressing topic to life through a thought-provoking conversation with Rich Nuzum, global chief investment strategist at Mercer [1]. They delved into the performance of ESG funds, the controversies surrounding them, and the increasing relevance of ESG investing in light of climate change and extreme weather events.
The Performance of ESG Funds
One of the key insights shared during the discussion was the performance of ESG-themed funds compared to the broader stock market [2]. A year-to-date analysis of the ten largest ESG-themed funds revealed that only three out of ten had outperformed the S&P 500. Surprisingly, two of them had yielded negative returns year-to-date, despite the S&P 500’s robust performance.
This finding raised intriguing questions, particularly as ESG funds had previously gained recognition for their impressive performance, especially during the height of the COVID-19 pandemic when oil prices plummeted [2]. However, 2022 brought a shift in the dynamics, with geopolitical events like Russia’s invasion of Ukraine causing oil prices to surge past $100 per barrel. Many ESG investors were surprised as they significantly underperformed the market, primarily due to their limited exposure to traditional energy sectors.
ESG Values and Controversies
ESG investments inherently prioritise values, which has sparked controversy and political debate [1]. Critics argue that these investments prioritise ideology over financial returns. Rich Nuzum’s perspective on this matter is insightful—he believes that the current discourse surrounding ESG investments mirrors conversations that have been taking place within institutional investment committees for over three decades.
Nuzum contends that this discourse is constructive as it educates investors about the multifaceted nature of ESG [1]. ESG isn’t a one-size-fits-all concept; it entails different considerations. Investors should understand what each ESG package entails and how it aligns with their risk-return preferences, impact goals, and values. Even among the most dedicated ESG investors, there are significant divergences in beliefs.
ESG Investing in the Face of Climate Change and Disasters
As climate change continues to impact our world, and we witness a growing number of natural disasters such as wildfires, extreme heat, flooding, and hurricanes, the “E” in “ESG” (Environmental factors) takes centre stage [1]. The widespread media coverage of these environmental catastrophes has prompted both institutional and retail investors to reevaluate their investments.
Investors are now asking themselves crucial questions: What factors truly drive security prices, and what kind of impact do they want to have on the world? [1]. Can they generate profits while simultaneously contributing to a positive impact on the environment? Many are committed to reflecting their values in their portfolios, avoiding investments that harm the planet and focusing on opportunities that promote environmental well-being.
Clearvolt: A Beacon Amidst Climate Challenges
In this era of ESG-conscious investing, Clearvolt’s innovative zero Capital Expenditure (CapEx) solar energy solution emerges as a beacon of hope—a means for businesses to combat climate change, reduce energy costs, and navigate the challenges posed by disasters exacerbated by climate conditions.
Clearvolt takes on all the upfront costs related to the surveying, planning, installation, and maintenance of solar arrays at client sites. In return, businesses purchase the electricity generated by these solar installations at rates that can be up to 50% lower than their existing energy costs. This arrangement allows companies to immediately realize cost savings without any initial investment or ongoing maintenance costs.
But Clearvolt’s impact goes beyond financial benefits. It aligns with corporate sustainability goals, offering a pathway for businesses to lower their carbon footprint and improve their ESG (Environmental, Social, and Governance) profile. In certain cases, the adoption of these solar solutions can also lead to improved EPC (Energy Performance Certificate) ratings and potential tax benefits through capital allowances.
Clearvolt’s business model aims to remove financial barriers to renewable energy adoption, making it easier for businesses to transition to greener, more cost-effective energy solutions. As the world confronts an increasingly urgent climate crisis, Clearvolt offers a strategic, sustainable, and financially sound solution for businesses looking to lead the charge towards a better, more resilient tomorrow.
The insights from the engaging conversation on Marketplace Morning Report underscore the pressing need for businesses to consider ESG principles, especially as climate change and extreme weather events continue to shape our world. Clearvolt’s innovative zero CapEx solar energy solution stands as a testament to progress—a solution that not only lowers energy costs but also empowers businesses to combat climate change and navigate the challenges posed by disasters exacerbated by climate conditions.
Clearvolt’s mission is not just about reducing energy costs; it’s about empowering businesses to contribute to a greener, more sustainable future. As we look to the horizon of a rapidly changing world, Clearvolt shines as a beacon of hope, offering a tangible path towards a brighter, more resilient tomorrow.
References:
[1] Ben-Achour, S., & Schroeder, A. (2023, September 5). Is climate change pushing more investors to ESG funds? Marketplace Morning Report. URL: https://www.marketplace.org/2023/09/05/is-climate-change-pushing-more-investors-to-esg-funds/
[2] CNBC – Sustainable Returns – The market’s most political stock picks had a bad year, but they’ll be back in 2023 URL : https://www.cnbc.com/2022/12/27/the-year-of-esg-was-worse-in-politics-than-stock-market-performance.html