This week we take a look at the latest round of earnings calls on our ESG Safeguard platform focusing on Clean Technology investments compared to prior years. While on average the mentions surrounding clean technology have leveled off over the past few years, we found that the proportion of statements discussing investment and specific action have increased.

Sam Leavitt
May 27, 2021

ESG Spotlight: 1Q Earnings Roundup—Clean Tech Investment Spikes

ESG Spotlight: 1Q Earnings Roundup—Clean Tech Investment Spikes

Companies are starting to put their money where their mouth is. This week we reviewed the latest round of earnings calls on our ESG Safeguard platform where we observed how company statements have become more specific when discussing Clean Technology themes. For Clean Technology, overall volume has leveled off in the past few years on average, but the proportion of statements speaking to specific investment actions have increased.

ESG Safeguard Platform: Q1 Earnings Calls, Clean Tech Mentions Discussing Investments

This could be due to increased activity from President Biden’s stance towards climate change and the increased funding for renewables. However, even before Biden was elected renewables had a hot start to this decade. According to the numbers from the Energy Information Administration, over 80% of the new energy added to the U.S. grid during 2020 came from renewable sources.

Why Does Investment Language Matter?

Investment language in earnings calls are important to ESG investors for a few reasons. Primarily, it shows that a company is in it for the long-haul. Companies can spend their money on a variety of things and a declared investment towards infrastructure or research and development show they have an idea of where the future is headed.. Furthermore, investment statements not only show that the company understands what opportunities are available but also that they are publicly committing to capitalize on those opportunities.

ESG Safeguard Platform: Q1 Earnings Calls, Environmental Extraction Insights

Who is Investing?

Companies, specifically renewable energy related companies who appear most frequently in our Clean Technology event type, have more on the horizon as we see from the latest wave of earnings calls. The investment amounts some of these companies are discussing are not small potatoes either, with some revealing huge future capital outlays. Ameren Corp. (AEE:US) for example, announced a project that amounts to nearly 2% of the total energy added to the U.S. energy grid in 2020 below:

“Speaking of clean energy transitions, let's move now to page 9 for an update on our $1.1 billion wind generation investment planned to achieve compliance with Missouri's renewable energy standard through the acquisition of 700 megawatts of new wind generation at two sites in Missouri.” – Ameren Corp. (AEE:US)

Along similar lines Chevron (CVX:US) revealed new opportunities in their investment pipeline. Although not as specific as the Ameren example, there are five distinct projects that cover a breadth of energy types.

“Also, we've continued to invest in emerging low-carbon technologies, including announcing five venture investments this year in geothermal power, offshore wind and green ammonia.” – Chevron Corp. (CVX:US)

Geothermal energy and green ammonia are brand new industries for Chevron . Green ammonia is a form of storage for hydrogen and falls into the hydrogen category. We recently discussed a partnership between Chevron and Toyota Motors (TM) in a previous post whereby the two companies would explore hydrogen as a joint-venture. This particular announcement could be a demonstration of their commitment to that partnership.

Across the Atlantic, Iberdrola SA (IBE:ES) remarked on a joint venture with Total (TOT), and revealed plans to bid for energy rights to offshore wind tracts in Denmark. Wind development, especially in Northern Europe has really taken off in recent years with the Dogger Bank Wind Farm off the coast of England being the most recent example involving multiple companies.

“We're also partnering with other energy companies to invest in specific large-scale investment projects, mainly in offshore wind, like Total, with a joint venture to participate in the next auction of offshore wind in Denmark and to develop onshore wind and solar projects together in France.” – Iberdrola SA (IBE:ES)

Communication is Key

As a proportion of Clean Technology extractions, statements that discuss investments have gone up even as the volume has leveled out. Companies have something to show when it comes to clean energy and the role it plays in their strategy going forward. Energy companies have a better understanding of how development in this space will look in the future, and are able to better communicate with investors how they will carry out those plans. Overall, specific statements in earnings calls are helpful to ESG investors because it shows that companies understand the issues at hand, and have a plan to tackle them.

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About Amenity

Amenity Analytics is the industry leader in providing insights from unstructured text by using Natural Language Processing (NLP) assisted by Artificial Intelligence (AI) and Machine Learning (ML). Amenity’s NLP system is a sector-agnostic, language-dependent tool for quantitative text analysis that is deployed across the financial services industry and beyond.

This communication does not represent investment advice. Transcript text provided by FACTSET and S&P Global Market Intelligence.

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