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Sustainable Equity opportunities for the energy transition

There is a big opportunity for Australian companies to participate in the growing demand for renewable energy.

Potential energy transition winners

So, which companies do we think will be central to the opportunities in renewable energy generation and infrastructure, or energy consumption over the next decade?

  • The Australian Banks are essential to providing green finance opportunities to Australian companies to enable the carbon transition from fossil fuels to renewable energy. ANZ Banking Group, Westpac Banking Corporation, Commonwealth Bank of Australia and National Australia Bank are all very focused on Sustainable lending, with all four banks committed to phasing out any lending to thermal coal by 2030 and influencing their top 100 emitters to undergo a rapid transition away from fossil fuel to renewable energy. In total, the big four banks now have circa A$215 billion of committed sustainable finance initiatives by 2030. This includes affordable housing and low carbon projects.2
  • Macquarie Group provides finance and private equity for large scale projects around the world. Macquarie has approximately A$30 billion of available finance that can be deployed into green capex/investment/renewable infrastructure and are already the largest investor in offshore wind farms in the UK.3
  • New Zealand utilities predominately use renewable energy for their electricity generation, sourced from hydro, geothermal and solar, and are continuing to invest in the renewables space. These companies include Mercury NZ, Genesis Energy, Contact Energy and Meridian Energy.
  • Worley is a major provider of project and asset services to the global energy industry. Worley benefits from the trend to renewables as new renewable infrastructure is required to be built and developed, replacing redundant capacity reliant on fossil fuels. Today around one third of their forward order book is for energy transformation/solutions.
  • Monadelphous Group has a significant role in the construction of renewable infrastructure such as wind power, and in maintaining and transitioning old world infrastructure into new. This includes decommissioning oil and gas plants and the construction of more efficient renewable energy infrastructure.
  • Mining companies which mine copper, such as Oz Minerals, are also beneficiaries of the move to fully electrified transport, especially cars and trucks as part of the focus on reducing emissions. Copper is a key metal for electric motors.
  • Owners of shopping centres such as Scentre Group and Vicinity Centres are sourcing renewable energy via Power Purchase Agreements (PPAs) and building solar panels on roof tops.

The list of stocks above is not exhaustive. As we step closer towards a low-carbon energy system over the coming decade, we look forward to using our fundamental research and Carbon VaR investment tool to identify more ASX-listed investment opportunities that can leverage this very important transition to renewable energy and also generate long-term financial returns for our clients.

The Martin Currie Australia Sustainable Equity strategy investment process looks at a company’s progress on its ‘sustainable pathway’ and its ‘net benefit to society’ as central to the investment opportunity. The strategy invests in quality Australian businesses with higher sustainability ratings that also have compelling financial returns.