On the heels of a dire report from the UN’s Intergovernmental Panel on Climate Change (IPCC), business interests are increasingly deploying capital at scale to make meaningful changes towards green initiatives. Our ESG Top Movers revealed the stories that didn’t garner as much news volume compared to others, but significantly moved companies' sentiment scores in the latest 7-day period.

By
Sam Leavitt
|
August 12, 2021

ESG Spotlight: ESG Top Movers Shows Corporates Ditching Oil for Renewables

Article
ESG Spotlight: ESG Top Movers Shows Corporates Ditching Oil for Renewables

In light of the new U.N. IPCC report on the dire straits we and our planet face, the theme this week focuses around environmental developments. Using our Top Movers feature we were able to uncover the stories that didn’t garner as much news volume compared to others, but moved their companies sentiment scores dramatically for a 7-day period compared to a 365-day baseline. Top Movers allows us to take our sentiment scoring from a static data point, to a dynamic comparison tool. Similar to our Greenwashing Score, sentiment differences help analyze change over time.

ESG Safeguard Platform: Top 7-Day ESG Movers, 180-Day Baseline Period (Aug. 10, 2021)

From Oil to Wind

For a large company that has been around since the 1950’s, SBM Offshore (SBMO:NL) does not attract much attention in the media. Earnings calls seem to be their main source of information for the public. Their baseline sentiment for 365 days was -40 and increased to 100 in the past 7 days making them our Top Mover for positive ESG sentiment. The company is involved primarily in single-buoy mooring systems for offshore oil and gas. Earnings call discussion laid out a plan to become more involved in offshore wind, similar to our content a few months ago on the Industrials category following energy in the push for renewable resources. SBM feels specifically that their proprietary tension leg platform design has direct applications for offshore wind and they established Floventis Energy in partnership with Cierco Wind Energy. Currently the joint-venture company is working on the Llyr project to install wind in the Celtic Sea. SBM plans on spending between $150M to $200M on projects on this joint-venture in the next seven years.

For a 365-day period the company has a Severe Greenwashing risk rating due to a bribery scandal from late last year, speaking to Governance risk. However, when looking at only Environmental issues SBM Offshore has a Negligible Greenwashing risk rating, indicating that their efforts in pivoting towards renewables could be sincere, especially since the ball is already rolling in that arena. As demand for renewables continues to grow, underscored by the recent climate change reactions around the globe, industrial companies have a unique opportunity to leverage engineering expertise for a variety of applications.

McDonald's and eBay: ESG Match Made in Louisiana

Louisiana ranks 48th in renewable energy output in the US. The state’s solar capacity is 190 MW of output. By comparison the small state of Rhode Island has 412 MW and New Jersey 3,653 MW of solar output. A new solar project being developed by Lightsource BP, which is partially owned by British Petroleum seeks to address that. The Ventress solar project will add 300 MW of utility-scale solar to the state’s energy grid, nearly tripling Louisiana’s solar capacity. The funding for the project is being fueled by the unlikely pairing of eBay (EBAY) and McDonald’s (MCD) in the form of power purchase agreements for their energy needs. McDonad’s has many locations around the US and within the state of Louisiana, while eBay operates a data center in the state that they are seeking to power with renewables.

The company that caught our attention on the Top Movers index was eBay who’s sentiment improved from negative 34 to 67.6, a sentiment increase of 101.5 and fifth best overall for a 7-day period compared to a 365-day baseline. Similar to SBM, eBay has a Severe Greenwashing rating mostly due to Governance related issues. When factoring only Environmental themes the rating is Low Greenwashing risk. The company plans to use all renewable energy for their data centers by 2025 and this investment is a step towards making that goal a reality.

Dupont

Dupont de Nemours (DD) settled one lawsuit in Delaware this week, but is facing a bevy of lawsuits across several states for polluting eastern waterways for close to half a century. Consistently a company that appears for their environmental woes, this week is no different. DuPont had a sentiment change of negative 133.8, one of the highest for the recent 7-day period. From a Greenwashing standpoint they are in the High risk category. DuPont does have goals around reducing emissions and discuss that frequently when expanding on environmental themes, however there is very little discussion of plastic and chemical discharges into waterways across the US, which is the primary concern of their legal troubles and public condemnation. The company’s management over the years have given it a lasting legacy synonymous with pollution. While money from the Delaware settlement will go towards environmental restoration, the mountain of lawsuits suggest the company has much further to go in undoing the damage they have wrought.

There are always positive steps companies can take and DuPont is no different. One idea would be taking a proactive approach and investing in water treatment projects. This could be done in partnership with local governments that would insulate their supply chain and may lessen the blow of the 27 lawsuits they are facing. Given their track record, this idea may not be the most likely scenario. What we do know is that DuPont is carrying some serious legal baggage and will be paying out these lawsuits for years to come.

The Private Interests Hold the Key to Change

As climate change related events are becoming more prevalent and more destructive in our everyday lives, business interests are the one sector of our society that can move fast enough and deploy enough capital at scale to make a meaningful impact. Government regulation is helpful in pointing companies in the right direction and making investment towards renewables more friendly, but at the end of the day it is the investors and companies that direct the flow of capital. As we saw from our Top Movers this week private interests that have long been associated with oil, are acting in Europe and the US to develop renewable energy. The UN IPCC report shows us that these types of changes are needed now more than ever. In order for companies to invest in their future, they need to ensure that they remain relevant and competitive in a century that is increasingly being defined by Global Warming.


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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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