From an ESG perspective, earnings this week focused on Clean Tech infrastructure including carbon capture and hydrogen. We also picked up increased commentary on Green Bonds as more companies and municipalities look to fund ESG initiatives in this manner.

Sam Leavitt
November 9, 2022

Key ESG Highlights in Earnings—AWN, BONHR.NO, NWN, PRIM, PSPN.CH

Key ESG Highlights in Earnings—AWN, BONHR.NO, NWN, PRIM, PSPN.CH

Looking at earnings calls this week on our ESG Safeguard platform, there was a shift in topics being discussed in management commentary towards wind and carbon capture and less around recycling themes as we saw in previous weeks of earnings calls. 

We also see mentions around “Green Bonds.” Green Bonds have been a growing category and many companies and municipalities are turning to them to fund specific projects and initiatives in the ESG space.

ESG Safeguard Platform: ESG Topic Counts from Earnings Calls, Past 7 Days
Amenity ESG Safeguard platform: ESG topic counts from earnings calls, past 7 days.

Green Bonds

PSP Swiss Property AG (PSPN:CH)
"We also report today the launch of a new Green Bonds framework, which allows us to reclassify all of our outstanding bonds of the amount of CHF 1.8 billion into Green Bonds.
And with that, we expect that any future bond we will issue will most likely be a Green Bond.”

PSP Swiss Property is a real estate firm, and Green Bonds in this context are important as they will likely go towards constructing projects more sustainably and retrofitting existing buildings with renewable energy. The Built Environment (a term that encompasses the buildings we live in, the utility distribution systems, as well as the roads, bridges, and transportation systems we use) is still one of the largest contributors to GHG emissions, and estimates show that up to 40% of GHG emissions come from this category between construction and operations.

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Turquoise Hydrogen and Green Ammonia

Hydrogen fuel comes in many varieties and this week we saw a new term for a new technology being pioneered in this space. Northwest Natural Holding mentions they are working with Modern Electron to pioneer “Turquoise Hydrogen” projects. This is a process that turns natural gas into hydrogen and solid carbon through pyrolysis. Pyrolysis requires electricity, and in theory, if this electricity is renewable then it is a zero carbon process. The byproduct is hydrogen fuel and solid carbon that is sequestered in the process without any additional investment into carbon capture overhead. This would help lower the cost of hydrogen production and adoption, without sacrificing on GHG emissions

Northwest Natural Holding (NWN:US)
“The other project that we're really excited about is turquoise hydrogen, so a methane pyrolysis project with Modern Electron.
And if you followed it in the news, there's a lot of excitement about turquoise hydrogen because of its potential to be one of the lowest cost low-carbon fuels.”

Green ammonia is also an emerging area in the hydrogen world, and a technology that is hydrogen adjacent. Ammonia is used in 80% of agricultural operations and can be produced using green hydrogen and nitrogen separated from air. It can also be used as a binding agent to store and ship hydrogen over long distances. Green ammonia is increasingly being integrated into operations for companies in the hydrogen space. Aker is one company that has been developing hydrogen capabilities and we can see in their commentary that they are taking the next step into green ammonia production.

Aker Horizons (AKH:NO)
“But first, Chile, where we're developing a large-scale renewable to ammonia project together with Mainstream.
World-class conditions for low-cost renewables in the country paves the way for highly competitive ammonia production.”
Primoris Services (PRIM:US)
“We have clients we're in the middle of designing for clients on carbon capture projects and we've got clients looking at hydrogen projects.
So, there are projects out there. You're just not you're not going to see keystone unless something changes with the government with the regulatory process.”

Primoris is an infrastructure company specializing in energy operations focused largely in Texas. Their commentary reveals that the firm sees projects moving towards hydrogen and carbon capture, and interestingly, that they don’t anticipate any keystone oil pipelines in this regulatory environment.

Offshore Wind

Water is emerging as an important topic from a material perspective as it impacts agriculture, beverage manufacturers, and even data centers that use water for cooling. Swiss-based industrial company, Sulzer sees desalination as an area of growth, especially in water stressed regions like the Middle East.

Bonheur (BONHR:NO)
“And just to recap, the Codling project is the largest offshore wind project in Ireland.
It's a bottom fixed project. We own it in a 50/50 joint venture with EDF. It is one out of six projects which qualify for the ORESS 1 auction, which is expected to be on April 23.
So, overall, a significant offshore wind project not only in the Irish context where it's the biggest but also in a European and global context.
So, the aim of this partnership is to discuss and develop tomorrow's solutions for dynamic cables for floating offshore wind. This has been part of our strategy from day one.”

Offshore wind continues to be paramount in renewable energy, and along with solar, are the base of renewable energy that fuels green hydrogen production. Bonheur is exploring an interesting technology in “floating” offshore wind as opposed to the normal “bottom fixed” offshore wind solutions. They mentioned their bottom fixed projects that require infrastructure to anchor the wind to the seabed, very similar to an offshore oil rig. However, they are starting to conceptualize floating offshore wind projects which would drastically change the available sea area that can be used, allowing wind farming in deeper waters when anchors are unable to reach the seabed.

Green Infrastructure

This week revealed a lot of innovative technologies being explored from an infrastructure standpoint in the hydrogen and renewable energy space. It is interesting to see several companies like Primoris and Northwest Natural Holding, typically involved in fossil fuel production, embracing the shift to lower carbon technologies.

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

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