Using data from our ESG Safeguard platform and further analyses, we focused on one of the most exciting parts of the Q2 earnings call period, investment statements. In particular, we highlighted a few narratives from smaller firms regarding project developments and specific monetary spends that really stood out. This is a good example of how Amenity’s NLP solutions surfaces meaningful insights from smaller companies that are often overshadowed by narratives from larger firms.

By
Sam Leavitt
|
August 5, 2021

ESG Spotlight: Uncovering Small Cap Standouts from Q2 Earnings

Article
ESG Spotlight:  Uncovering Small Cap Standouts from Q2 Earnings

Statements around investment and development of recent projects allows companies to communicate their intentions to investors. Statements about recent projects are just as important as future investments because when they are approved for use and attached to a revenue stream, it marks the beginning of a return on investment for the company and investors. 

Notable investment statements for us at Amenity entail a specific spend tied to a goal or a reference to specific action or partnership. Investment statements like these help us discern what information companies are acting on and provide an indicator towards where a company sees added value for both them and their shareholders. From our ESG Safeguard platform we present some examples of investment statements in recent earnings calls that helped us highlight these companies.

“Our recently announced 60 million investment in clay brick capacity in the West Midlands will deliver attractive returns as well as producing the UK's first net zero carbon brick factory.” Ibstock
“These include investing in several early-stage geothermal energy companies.” Nabors
“This is our second large scale solar project and part of our plans to more than triple our investment in renewable energy between 2021 and 2025.” WEC Energy
ESG Safeguard Platform: Quarterly ESG Breakdown, Investment Statements

Earnings calls are a particularly good source for this analysis because companies can not engage in the same puffery around ESG goals that they might when not directly speaking to investors, and all companies have an equal opportunity to communicate their priorities without a large-cap news media bias.

Therefore, while it’s no surprise to see a familiar name like Equinor, a number of other companies that haven’t spent much time in the limelight caught our attention as well!

Equinor (EQNR:NO)

Equinor announced that their Baltyk II and III wind projects have been awarded contracts for up to 25 years. As the Norwegian oil major transitions towards increasing development in renewable energy, particularly in the wind category, projects like this mark valuable revenue streams that give financial credibility to their ESG efforts. The company says these projects, located in the Baltic Sea, are linked to Poland and are helping the country meet their renewable energy targets. As more countries start to follow through with their energy commitments, large companies like Equinor are well positioned to continue to grow revenue streams in renewables.

Eversource (ES)

The New England-based company announced that they will have invested $55 million by the end of the year on electric vehicle infrastructure in Massachusetts, resulting in 4,000 newly built charging stations. Currently, the company provides renewable energy for buildings via residential and commercial solar. Investments into charging stations marks Eversource’s entrance into another fast growing market, renewable energy for electric vehicles.

Ibstock Plc. (IB:GB)

Across the pond, Ibstock is investing $60 million towards building the UK’s first net-zero brick factory. The construction and engineering company is one of the UK’s largest consumers of raw materials, so this investment is really a move to vertically integrate and has the potential to reduce costs in their supply chain. The UK has committed to renewables and we have previously covered ESG-related developments in the country, most recently in our small-cap coverage in June. Development in the UK seems to be focused on wind energy and a variety of companies are vying to get in on the action. As renewable energy becomes more prevalent, builders and manufacturers like Ibstock will have access to that clean energy.

Nabors (NBR:BM)

In their latest earnings call, Nabors discussed investing in more renewables, including some early stage geothermal energy companies. The company is a large oil rig and drilling contractor and much of the infrastructure and expertise they currently possess could potentially be transitioned to geothermal. Geothermal energy as a concept in America is still not very widespread; but the U.S. is actually the world's largest producer. Currently, 95% of power generation in California and Nevada comes from geothermal energy sources. Studies show that other parts of America, including Appalachia, are very well suited for this type of energy development. Nabors did not reveal many details about who these early stage geothermal companies are and where they are located, but it is an exciting development nonetheless, given how it is more of a niche energy solution at the moment bound to specific geographic areas. The major players in geothermal energy in the U.S. are Calpine and Northern California Power Agency based in California, as well as Ormat Technologies and Terra-Gen Power operating in Nevada. These companies are fairly developed though and it could be smaller players that Nabors is invested in since they described them as early stage companies.

Rounding-Out the Earnings Calls

Otter Tail Corp. (OTTR), was authorized by the Minnesota PUC to start providing energy output for Minnesotan customers from their latest solar project. The electric company has been around since 1907 and additionally holds a variety of subsidiaries that manufacture metal parts and PVC piping. Most of the company's renewable energy currently comes from wind as well as some hydroelectric. This is the first major solar project for Otter Tail and will help the company accelerate their divestment from their coal fired power plants.

WEC Energy (WEC), another regional legacy energy company like Otter Tail, recently completed their second large solar project and plans to triple investments in renewable energy by 2025. The Milwaukee based energy group has operated wind assets since 2008, but have said they are still fairly new to solar. A commitment to triple investment in this area by 2025 marks yet another milestone in a growing trend towards renewable energy in America.

Uncovering Insights, Large and Small

Using Amenity’s NLP solutions to uncover investment statements from companies in earnings calls helps us quickly analyze what interesting pieces of information are out there from all companies, both large and small. Talking about project developments and specific monetary spends gives all companies a chance to showcase their value. It was no surprise to see some larger names, but the smaller companies really shone bright in this week's highlights. It is particularly striking that where US energy majors are faltering in the transition to renewable energy, regional energy providers are investing themselves in securing a greener future for America.


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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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