Responsible Investing (RI) and The Energy Sector

Responsible Investing incorporates environmental, social and governance (ESG) factors into your investment portfolio. These portfolios include stocks and bonds with brands that value sustainability, human rights, good working conditions, employee diversity and resource conservation. These brands are constantly vetted by fund managers, who are active shareholders and represent your interests inside the company, giving you a voice.  

There’s no need to compromise your expectations of return as an ethical investor. Every brand is selected not only for its alignment with investor values, but also for its historically better-than-average performance at market. 

Why invest in the energy sector? 

In 2000, non-carbon energy sources (at the time primarily hydro and nuclear) contributed just four per cent of power to the global energy grid. Today, driven mostly by solar and wind, that number is greater than 30 per cent, and expected to tip past 50 per cent by the end of the decade. Here are some reasons why: 

• Efficiency in manufacturing: The price per kilowatt hour from solar panels has plummeted. This means that greater impact can be achieved with less capital, freeing up resources for more cash-intensive projects like wind and battery technology. 
• A smarter grid: Software analysis has allowed for better efficiencies, particularly in industries such as shipbuilding and steel production. It’s also sped up and streamlined reporting to the energy grid to anticipate significant power needs. 
• Regulation: The global effort to reduce greenhouse gas emissions (GHGs) in order to lessen human-driven climate change makes sustainable energy more attractive to legislators and regulators. This results in more bids, and more opportunities for innovators in the sustainable energy space. 
• Market pricing: The entirety of the carbon market is priced well below cost. The consumer price of a barrel of oil — which this year fell below $0 — or a litre of gasoline is dominated by the cost of subsidizing the industry. With an excess global supply, key players in the financial world aren’t touching carbon investments, down by over half a trillion dollars this year. The capital is flowing towards sustainable energy and the talent, infrastructure, systems and software to make it all work. 
• The long game: Over the last 10 years, global energy expenditures have been largely stable, with a modest fluctuation between $850 billion and a trillion dollars. Money has been moving “sideways” into sustainable energy, even as the demand for electricity climbs worldwide. To meet anticipated needs, sustainable systems are going to require a faster build-out time and corresponding capital. 
  
  

Get expert advice on investing in the energy sector 

Energy is a key driver of efficiency and innovation worldwide, from water treatment and waste management to agriculture. There are many starting points for exploration and discussion and the winwin EarthLink™ GIC ​is a great place to begin. 

To explore how Responsible Investing can be a valuable part of your financial strategy, book an appointment with one of our advisors.

See some of the most common myths and realities around Responsible Investing.