Investing in the transition to zero emissions

Provided by Australian Ethical

Jonathan Hoyle Stanford Brown

As well as providing strong investment returns to its clients, the companies Australian Ethical invests in are helping shape the world we live in. Here are five examples of companies it is  investing in that are leading the transition to a zero-carbon economy.

To limit global warming to 1.5° Celsius, we need to reduce emissions to zero by 2050. To achieve this, society must eliminate or offset all greenhouse gas emissions. This ambitious goal is possible, but it will require major investment into innovative, low-carbon companies.

For decades, Australian Ethical has been investing in companies that are working to mitigate and solve the climate crisis, while also delivering strong shareholder returns. Here’s how some of the companies we invest in are helping change the world.

 

it’s possible to deliver strong financial returns to investors, as well as benefits to the environment.

1. Renewable power generation

Meridian Energy, a New Zealand-based company, provides power solely from hydroelectricity, geothermal and wind resources. With its subsidiary, Meridian Energy Australia, the company operates two Australian wind farms, as well as the green electricity company, Powershop. Meridian also operates wind farms in Antarctica and a solar plant in the United States.

Mercury Energy is another major New Zealand energy provider that derives renewable power from wind, hydro and geothermal stations. It also has a solar farm and a research and development centre that trials new innovations like battery storage and electric vehicle charging.

These companies show it’s possible to deliver strong financial returns to investors, as well as benefits to the environment. Meridian Energy and Mercury were among of our best-performing stocks in the 12 months to 31 October 2019, returning 56 per cent and 54 per cent, respectively.

In the logistics sector, transportation and plastic production have significant carbon footprints

2. More efficient logistics

Just about every industry produces emissions, so they all need to reduce their carbon footprint to help combat dangerous global warming. In the logistics sector, transportation and plastic production have significant carbon footprints. Australian company, Brambles, which we invest in, is one supply chain logistics company that’s using smart strategies to reduce emissions.

Brambles supplies plastic and wooden pallets and containers that can be shared and reused. The company takes a circular economy approach and is working towards achieving zero waste to landfill by 2020.

Once its plastic products reach end-of-life, they are either reground and recycled into Brambles products or sold to approved third parties for reuse.

In 2019, 99.7 per cent of the company’s wooden pallets were sourced from certified sustainable timber, with 100 per cent targeted by 2020.

Brambles also helps minimise the environmental footprint of its customers and supply chain by using collaborative transport to reduce the number of empty trucks or unnecessary trips, as well as choosing more efficient, lower carbon emitting modes of transport (like rail or sea) over air.

heating and cooling makes up 40% of a typical household’s energy usage

3. Sustainable insulation

It’s estimated that heating and cooling makes up a staggering 40 per cent of a typical household’s energy usage. Insulation can significantly reduce the need for air conditioning or heating, thereby shrinking a building’s overall carbon footprint.

One of our international investments, Danish company Rockwool Group, is the world’s leading manufacturer of sustainable insulation products for the construction industry. Stone wool insulation is fire resistant and doesn’t create smoke or toxic gases in a fire, making it a safer choice for insulation in buildings. It contains an average of 75 per cent of recycled content, compared to fibreglass, which averages about 40 per cent to 60 per cent.

Stone wool can also absorb or repel water – so, hydroponic farmers can use it in place of soil to grow fresh produce with less water. What’s more, it is possible to use stone wool to drain water after heavy downpours from roofs into stone wool basins, helping resupply precious groundwater.

“Stone wool can also absorb or repel water – so, hydroponic farmers can use it in place of soil to grow fresh produce with less water. What’s more, it is possible to use stone wool to drain water after heavy downpours from roofs into stone wool basins, helping resupply precious groundwater.”

4. Better solar panels

Solar photovoltaic systems can power anything from tiny applications, like calculators, to huge power generation facilities. In 2018, solar photovoltaic generation grew by 31 per cent, more than all other renewable technologies in that year.

One of our U.S. investments, First Solar, is a leading manufacturer of photovoltaic modules. It operates and maintains some of the world’s largest grid-connected photovoltaic power plants, leveraging its enormous scale and the efficiency of its Series 6 solar panels to deliver strong shareholder returns.


“In 2016 alone, the world generated about 44.7 million metric tonnes of e-waste (according to Global E-waste Monitor 2017) – that’s 6.1kg per person. Dumping valuable metals and electronics into landfill is a huge waste of finite materials. It also contributes to pollution, and their toxic by-products can lead to serious health problems.”

5. Reducing and recycling e-waste

In 2016 alone, the world generated about 44.7 million metric tonnes of e-waste (according to Global E-waste Monitor 2017) – that’s 6.1kg per person. E-waste consists of things like computers, TVs and smartphones. Dumping valuable metals and electronics into landfill is a huge waste of finite materials. It also contributes to pollution, and their toxic by-products can lead to serious health problems.

By investing in global metal and electronics recycling company Sims Metal Management, we’re helping reduce waste and preserve valuable resources for future use. Operating across five continents, Sims Metal Management purchases, processes and recycles metal and non-metal waste from businesses, other recyclers and the public.

Sims’ new business goals include expanding into the waste-to-energy business. As part of this business, it has entered into a joint venture with LMS Energy, with the aim to use landfill gas to generate electricity

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