This is a blog on the craze for everything green. This craze can be termed a Meme. Meme is an idea, behavior, or style that spreads by means of imitation from person
to person within a culture and often carries symbolic meaning representing a particular
phenomenon or theme.
Green assets and grain stocks or having a wild ride in the stock market. The value of wind power producers is up by more than 33%. The shares of a solar firm called Sun Run have tripled in value. Tesla, Nio and other electric vehicle manufacturers have claimed sixfold and nine fold valuations.. The Economist constructed a portfolio of such green companies with a market capitalization of $3.7 trillion, the value of which has risen 59% since the beginning of 2020. The greenest 25% of the hundred firms listed by the Economist saw their share price increase by 110%.
Investors are focused on environmental, social and governance factors(ESG). Global flows into ESG funds topped one 178 billion in the first quarter of this year. Many clean energy firms are now more viable. Prices of some technologies have fallen dramatically making them competitive with fossil fuel firms. The cost of solar power has shrunk 80% in the past decade. Solar installations grew by 670% in the last decade but the product prices fell by 85%. Therefore cumulative revenue growth in the industry was roughly 15%.
The green meme is leading to some unprecedented changes in the corporate world. What happened in Exxon Mobil is a case in point. For the first time in a long time Exxonmobil has accepted directors who will promote low carbon strategies and were considered green tinged. There is tremendous pressure from pension funds with over $700 Billion in assets. Exxon Mobil gracefully accepted two additional directors who represented the green culture. This development represents a pressure on oil businesses to transition to a low carbon future. The International Energy Agency warned that investments in new fossil fuel projects must stop now if the global energy sectors are to achieve carbon neutrality by 2050. Europe has gone even more aggressive in demanding a 55% cut in carbon emission by 2030 itself.
The purpose of this blog is to introduce ESG and all associated features and the importance of scoring high in ESG rating for each and every industry. This will be covered in the next blog.
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Inspired by: News Items Including “The Economist”