About the Report
** As You Sow and Corporate Knights are not investment advisors nor do we provide financial planning, legal or tax advice. Nothing in the Carbon Clean 200 Report shall constitute or be construed as an offering of financial instruments or as investment advice or investment recommendations.**
We are happy to present the 2017 Q1 Carbon Clean 200TM list of publicly traded companies that are leading the way with solutions for the transition to a clean energy future. Since our first report was launched on August 15, 2016, a great deal has changed in the world. The UK had just voted to leave the European Union, the planet experienced “the hottest year ever” for the third year in a row, air pollution in China continued to exacerbate a health crisis, demand for fossil fuels kept declining, and the cost of renewables was on track to beat projections. And then came the U.S. election. The Clean200, it turns out, has been an insightful window into how the stock markets view the new administration and its relationship to a clean energy future. Over its first live performance period from August 15, 2016 to January 31, 2017, the Clean200 generated a 2.9% total return, underperforming the S&P 1200 by 1.26%.
The US election contributed to gyrations in the Clean200 vs. S&P 1200. In the lead up to the election from August 15 to November 8, when a Trump win was viewed as improbable, the Clean200 outperformed the S&P 1200 by a full percentage point. After Trump’s upset, there was a bump in the lead up to the January 20th inauguration, but the Clean200 lagged. In the brief window between the inauguration and the end of January, the Clean200 bounced back, turning in 2% (more than triple the 0.6% of the S&P 1200 for the same period).
But the real takeaway is that the clean energy story is global. While the stock market gyrates in the short term, the long term clean energy economic expansion continues afoot, regardless of what happens in the White House. A new report by Carbon Tracker and the Grantham Institute at the Imperial College of London, using the latest available data, makes a powerful case for the likelihood that we’re probably underestimating how quickly electric vehicles and solar will disrupt the oil and electricity markets. The report’s key findings:
• Solar PV (with associated energy storage costs included) could supply 29% of global power by 2040, leaving
natural gas with just a 1% market share (Exxon sees all renewables supplying just 11% of global power by 2040);
• Electric vehicles could account for approximately 35% of the road transport market by 2035 (BP put this figure
at just 6% in its 2017 energy outlook);
• Coal and oil demand will peak in 2020 and gas demand growth will be curtailed.
While the rhetoric and some of the cabinet appointments of the current White House seem incongruent with the above three points, President Trump’s recently released top 50 infrastructure projects is short on fossil fuels and long on clean energy, with 33 of the projects qualifying as clean energy. Beyond America, global growth is now being driven by emerging economies, which account for 80% of economic growth. This was one of the points made by the Chinese President’s Xi Jinping in his keynote address/coming out party as emerging superpower this January at the World Economic Forum in Davos. While not widely picked up in press reports, President Xi also made a point, emphasizing, “Our efforts to pursue green development are paying off.” Indeed they are. Among the 2017 Clean200 companies, Greater China takes the crown, with 71 companies versus 41 from
the U.S., despite the U.S. stock market being more than twice the size of Greater China’s.
Being on the vanguard of the clean energy transition is at once an economic, political (cleaner air), and geopolitical
imperative as it relates to China’s role as a leading nation in the 21st century, a point made in a recent report by the Institute for Energy Economics and Financial Analysis, which found China’s dominance in renewables is rapidly spreading overseas, with the country accelerating its foreign investment in renewable energy and supporting technologies. The key takeaway is that China continues to lead by investing in the clean energy future while the U.S. risks being left behind as the new administration looks to the past and talks up investing in coal and other fossil fuels. The clean energy “space-race” is on. It remains to be seen which country and which investors will prosper from it.
Founded in 1992, As You Sow is a 501(c)(3) tax-exempt nonprofit organization dedicated to promoting environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies. Our efforts create large-scale systemic change by establishing sustainable and equitable corporate practices. As You Sow was founded on the belief that many environmental and human rights issues can be resolved by increased corporate responsibility. As investor representatives, we communicate directly with corporate executives to collaboratively develop and implement business models that reduce risk, benefit brand reputation, and protect long-term shareholder value while simultaneously bringing about positive change for the environment and human rights.
Founded in 2002, Corporate Knights seeks to provide information that empowers people to harness markets for a better world. The company has a media and research division, which includes the award-winning business and society magazine Corporate Knights. The research division produces corporate rankings, research reports and financial product ratings based on corporate sustainability performance including Cleancapitalist.com and Decarbonizer.co. Its best-known rankings include the Best 50 Corporate Citizens in Canada and the Global 100 Most Sustainable Corporations. In June 2013, Corporate Knights was named Magazine of the Year by Canada’s National Magazine Awards Foundation. For more information about Corporate Knights, please visit tour site.