Unsung ESG Heroes - Planet

Investors can make a positive difference by providing capital to companies that are creating the products and services contributing to a better world. Nigel Yates, portfolio manager on the UK sustainable equity team highlights three companies that we think are making a significant contribution to the transition to renewable energy sources.

By 2030 the energy transition will be in full swing and the way we consume and generate energy will have changed dramatically. This is being driven by the climate imperative to reduce carbon emissions by almost half and the desire to decouple energy dependence from the vagaries of geopolitical shocks. 

These powerful drivers – alongside the stick of regulation and the carrot of government incentive packages, such as the US Inflation Reduction Act – will encourage investment in technologies and services that will enable 65% of the world’s total electricity supply to come from cheap, renewable sources.¹

In addition, it is expected that the global electric vehicle fleet will be twenty times bigger than today² , carbon capture and storage facilities will be operational and gas demand will be coming under threat from new technologies such as hydrogen.

These powerful dynamics are one of the key reasons that the AXA IM Sustainable Fund range uses a thematic People, Planet & Progress approach to invest in the companies shaping our future, for the better.

Focusing on companies helping to bring about change

Transforming a world reliant on fossil fuels for over a hundred years is not a simple, quick or cheap process. It is called a transition for a reason, and we see it as our obligation as responsible investors to invest in the companies leading the change whilst encouraging those reliant on profits from high carbon intensive industries to invest and adapt.

We would like to highlight three companies held across the AXA IM Sustainable Fund range that we believe are making a notable contribution to the transition process but perhaps do not achieve the same plaudits as some others. We call them the ‘Unsung Heroes’ of sustainable investment.

Mining and minerals - Weir

Weir is a mining equipment company held across the Sustainable Fund range. The mining industry currently accounts for approximately 8% of all global carbon emissions with many of the larger industry participants very focused on reducing their environmental impact. This is especially important when you consider that the green energy transition to power the electricity grids and electric vehicles of the future, will only be possible with huge additional quantities of copper, lithium, cobalt and nickel.

Weir provides technology solutions for the industry, such as their High Pressure Grinding Rolls (HPGR) which are used to crush rocks in copper extraction with an estimated 40% energy saving. They also have many other solutions that enable measurable water and energy savings such as their monitoring systems for shovels and particle size analysis.

Weir has put sustainability at the heart of their strategy and designed a technology roadmap to enable their customers’ operations to be smarter and more efficient. No long-term sustainable business can function without safe working practices. Weir also takes this aspect very seriously and has set a zero-harm goal.

Equipment suppliers - Ashtead

Ashtead, an international equipment rental company, is another great example of a company enabling companies to lower their carbon emissions through their investments in the latest, most efficient and low or zero-carbon equipment. They work closely with suppliers to bring to market new zero and low-emission equipment – for example the Doosan Bobcat – as well as alternative fuel versions to reduce both their own and their customers’ emissions. There are many examples within Ashtead’s fleet that highlight the benefits they can bring to their customers. Already approximately 20% of their rental fleet runs on alternative power sources to fossil fuels.

It is also worth noting that the rental sector supports many of the principles of a circular economy. These include shared use, efficient and reduced use of resources, high levels of maintenance and repair, and ensuring further use or recycling of equipment at the end of its useful life. Ashtead is also a responsible employer prioritising safety, flexible career development, diversity and inclusion.

Energy Transition – Chart Industries

Our final example is Chart Industries, a US industrial company with a long history in providing the technology and equipment for the liquefaction/compression of natural gas.

Over the last four years it has transformed itself, through a series of bolt-on and major acquisitions (including the recently announced acquisition of Howden) to put its technology and equipment at the centre of industries like hydrogen, carbon capture and storage, biogas and clean water.

This transformation has, in Chart’s own words, put it at the ‘Nexus of Clean’, with the transformation aligning its businesses with markets that are growing faster than its traditional areas and with greater value-added opportunities. Chart has significantly diversified its customer base – its technology in small scale carbon (CO2) capture has seen strong interest and demand from food and beverage manufacturers, a relatively new business area for it.

While it has expanded its breadth of technologies and the end markets it serves, Chart has continued to support its strong position in its ‘legacy’ LNG business. This business remains highly relevant as the war in Ukraine has shown the need for greater energy security and diversity of supply across Europe as it seeks to reduce its dependence on Russian gas.

Finally, Chart has a very positive message to send with regards to diversity and governance. Although Chart is one of the increasing number of US companies that split the role of chairman and CEO, it is highly unusual in that both these senior roles on the board are occupied by women, within an overall board that is majority female (57%). 

It is every company’s responsibility to help drive change and help achieve a better future for our planet and our objective is to encourage and help guide them on their journey.

Companies shown are for illustrative purposes only as of 30 April 2023 and may no longer be in the portfolio later. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.