The Sustainability Shift: The Impact On Energy Investment

Summary

• Contrary to the notion that tackling climate change comes at a net cost to the global economy, we expect that mitigating climate-related damages will help prevent economic deterioration and improve risk-asset returns.
• We believe traditional energy stocks have benefitted from the rotation towards value and that the short-term underperformance of renewable energy is dominated by its exposure to the growth factor rather than sector-specific concerns.
• As a long-term investor on behalf of our clients, our BlackRock Investment Stewardship (BIS) team encourages energy companies to have appropriately factored climate risk into their strategy development and be able to articulate a long-term value proposition to shareholders.

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By Yasmin Meissner, Alastair Bishop

Achieving “net zero” by 2050 will require a shift in the global energy mix, from both a supply and consumption perspective. This has implications for portfolio allocations and alpha generation