Updated: Mar 17
Why should you divest from fossil fuels and invest in renewable energy?
Since the industrial revolution, humanity has gone from muscle power and biomass burning for energy to fossil fuels (coal, oil, and gas). The burning of fossil fuels has been the main force behind the rapid development of technology and economies, but it has come at the cost of an increase in atmospheric carbon dioxide and air pollution.
As a solution to this global issue, there has been a push to change direction from fossil fuels to renewable energy. And, according to Forbes, the value of oil, gas, and coal reserves is set to drop due to the rise in government climate and energy security targets. This is paired with a higher risk of investing in fossil fuel caused by clean technologies (cleantech) competition.
The cleantech competition includes renewable energies such as wind, solar, hydro, and geothermal energy. The Australian Renewable Energy Agency defines renewable energy as energy that is:
“produced using natural resources that are constantly replaced and never run out.”
Renewable energy also creates a dramatically smaller carbon footprint compared to its predecessor, fossil fuels.
Is renewable energy a good investment choice?
The energy in Australia is changing with a growing interest in renewable energy. Due to government policy incentives, elevated electricity prices, and a decline in renewable generation technology costs, the market for renewable energy has seen a dramatic increase in investments. The graph above shows a steady increase in renewable energy sources for electricity generation.
As reported by the Responsible Investment Association Australasia (RIAA), investors have seen an average annualised return of 5.1% in GSS bonds and 11.3% in public equity across 2018 and 2019. For comparison, investments in positive social outcomes were recorded as being 4.4% p.a. while the investments in environmental outcomes were at 5.5% for 2018 and 2019.
Moreover, RIAA also discovered that 92% of impact investors have either had their financial expectations met (66%) or exceeded (26%). And with 90% of respondents believing that impact investing has a significant future in the stock market, the next question should be where to look.
⚠️Please note this is not financial advice, but simply educational content to learn more about sustainable finance and climate impact investing. You should always do your own research and seek professional financial advice to check how this information relates to your unique circumstances.
Where can I start impact investing?
Bloom Impact Investing is an impact investment app that will allow users to invest in a variety of green portfolios and clean energy companies and projects that accelerate decarbonisation. The following green stocks are just a few listed companies on the ASX and on other global markets that the Bloom team keeps on its green investing watchlist.
Read on to keep up with the growing trend of climate impact investing.
☀️ Solar Stocks
Enphase Energy NASDAQ ENPH
Enphase Energy brings reliable energy systems to manage home solar generation with the flexibility to adapt to home expansions, smart homes, and smart grid integrations. Their point of difference is made with the Enphase Microinverter, the most advanced inverter technology on the market with higher production and unmatched intelligence.
$264.8M in revenue
Approximately 1.3M systems in more than 130 countries as of Sept. 3, 2020
Meridian ASX MEZ
In its goal to minimise climate risk and toxic pollution, Meridian has become Australasia’s largest 100% renewable energy generator through its power portfolio of solar and wind farms and hydro plants. Through installing solar panels in businesses across Christchurch, Palmerston North, and Auckland, Meridian has aided the development of New Zealand's largest commercial solar programme.
FY20 saw a 24% growth in Australian customers and electricity sales
Group EBITDAF increased by 2% to $854M
2020 Ordinary dividend share 4% higher than the previous year
🌬️ Wind Stocks
Infigen Energy Limited ASX IFN
Infigen Energy aims to provide its customers with reliable renewable energy at competitive prices. They’ve recognised the intermittent risk of when their renewable power sources cannot generate power and have supported their portfolio with firm clean energy. Their renewable energy assets are among the largest in Australia, including Wind Farms and Battery Energy Storage assets. Infigen offers its customers (manufacturers, food and beverage processors, telecommunications providers, building and construction companies, universities, local councils etc...) a fixed price and a fixed volume of energy.
EBITDA of $163.3M
30% growth in commercial and industrial customer base
FY20, partnered with Swinburne Uni
Vestas XCSE VWS
Vestas has installed more wind power than any other company with their work spanning 83 countries. They undertake the designing, manufacturing, installation, and service of wind turbines across the world and have installed their product offshore, in high altitudes, and in extreme weather conditions.
186 million tonnes of displaced C02 emissions in 2020
129 GW of installed onshore turbines globally
Revenue increased by 22% (FY2020)
Tilt Renewables ASX TLT
Across Australia and New Zealand, Tilt is striding towards its goal to be a leading developer, owner, and manager of renewable energy solutions through its 8 operational wind farms. The company has 2 more under construction that are expected to generate enough clean energy for approximately 315,000 homes.
At a glance*:
Currently generating enough clean energy to power approximately 320,000 homes
Saves around 870,000 tonnes of carbon annually
Update: as of 17/03/2021 - Tilt Renewables has received a $2.74 billion takeover bid by the renewable energy investment group Powering Australian Renewables (PowAR), which includes including power company AGL Energy, and the Australian and Queensland government investment arms.
Goldwin SHE 002202
Goldwin has become one of China’s most innovative companies through its implementation of and investment in cleantech. With its 35,000 operational wind turbines across 27 countries, Goldwin aims to create future energy sources that are affordable, reliable, and sustainable.
Income of 5,000M in 2018
Installed new capacity of 7GW (including offshore capacity of 400MW) in China (2018)
🌊 Hydro Stocks
Carnegie ASX CCE
Carnegie harnesses energy through ocean waves and converts them into electricity with help from CETO technology. Carnegie’s patented technology has state-of-the-art features for greater efficiency in zero-emission electricity.
At a glance:
$3.7 million in cash reserves (Dec 2020)
Has signed a Collaboration Agreement with Hewlett Packard Enterprise
Genex Power ASX GNX
With a renewable energy portfolio that spans across Queensland, Genex Power generates its electricity from hydro, solar, and wind. Their hydro project was also a world first in repurposing an abandoned gold mine.
Cash at bank of $41M (Dec 2020)
Over 400MW of renewable energy and storage projects in development
♨️ Geothermal Energy Stocks
Mercury NZ ASX MCY
Currently, Mercury generates 100% of its energy from geothermal and hydro sources. Their 5 geothermal stations stretch across the centre of New Zealand’s North Island and they generate power 24/7. Unlike hydro and wind energies (which are both future projects for Mercury), geothermal energy isn’t reliant on the weather.
$494M EBITDA, with underlying earnings up $3M (2020)
FY2020 Total shareholder return of 4.5%
Mercury’s geothermal plants generate enough power for 330,000 NZ homes
🚘 Tech and Electric Vehicles Stocks
Mercury NZ ASX MCY
On top of generating renewable energy, Mercury also provides customers with electric vehicle options. Their goal is to make electric transport the new normal by 2030 and have even restored a ’57 Ford Fairline which now includes an electric engine. Mercury brings e-vehicle options like scooters, bikes, and cars to its members.
At a glance:
More than 69% of Mercury’s vehicle fleet is electric or plug-in hybrid
Has been given an A- from CDP (formerly the Carbon Disclosure Project)
Tesla NASDAQ TSLA
When it comes to tech, Tesla is hard to miss. Its origin started in electric vehicles with a determination to develop better and quicker cars that were more fun to drive than gasoline cars. The company’s expansion into clean energy and storage products has even reached Australian shores with the world’s largest lithium-ion battery in South Australia.
$19.4B in cash and cash equivalents (Q4 2020)
Produced and delivered half a million vehicles (2020)
Model S Plaid electric vehicle goes 0-60mph in <2.0 seconds
Which company should I invest in?
Each company listed above is driven to provide profitable solutions to the carbon emission crisis, but choosing the right company to invest in comes down to you! Ask yourself:
Is investing in shares and stocks right for my personal situation? Talk to a professional advisor first! You can find a list of ethical advisors on the RIAA website here or learn about how to invest in shares on the Money Smart website.
Which company reflects my values and impact interests?
How much am I willing to invest?
Is my portfolio of stock diversified? (Don't put all your eggs in one basket! A rule of thumb is to invest in various industries and locations to reduce risk)
How has the company previously performed?
How is the company performing from an Environmental, Social, and Governance (ESG) perspective?
Research is key, and through the links provided you can investigate the companies further. You can also sign up for the Bloom Impact Investing app where you’ll be able to track the value of your cleantech and clean energy shares, how much C02 you’re saving, and hear stories from the companies you invest in.
*Omamari Wind Farm Factsheet Edition 1, September 2020
This blog post has been prepared by Bloom Impact Investing to provide readers with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. We do not express any view about the accuracy or completeness of information that is not prepared by us and no liability is accepted for any errors it may contain. The information contained in this blog is of a general nature only, and does not take into account your objectives, financial situation or needs and is not to be taken into account as containing any personal investment advice or recommendation. No warranty is provided as to the accuracy, reliability and completeness of the information in this publication and you rely on this information at your own risk. Any past performance information in the publication is not a reliable indicator of future performance.