Sustainability has been a rising priority for many people and organisations over the past couple of decades. As climate change has become more of a pressing issue and risen up government agendas, it has developed into a common cause for the masses. As you would expect, you can see this reflected in the investment market.
In the US, investors funnelled $20.6 billion into sustainable investment funds last year, quadrupling the figure from 2018.
Sustainable funds strongly outperformed traditional funds over a five-year period from 2014 to 2019, with the FTSE Environmental Opportunities All Share Index showing a rise of 41.1% versus a 33.4% rise in the FTSE Global All Cap Index.
And this growth has only been accelerated by the COVID-19 pandemic, which caused vast amounts of disruption to the global economy and markets in 2020.
Following on from the move towards a greener planet pre-pandemic, lockdown and self-isolation brought about a rapid acceleration in environmental consciousness. Meanwhile, car usage fell drastically, flights were postponed, deferred, or altogether cancelled, and CO2 emissions plummeted.
And while the pandemic has significantly impacted almost every aspect of how businesses can operate, it too has foregrounded the importance of planning and structuring for chaotic scenarios.
Sustainability has been at the core of many recovery plans for governments worldwide, trying to rebound from damaged economies and low public opinions.
Plans for large-scale renewables, clean transport, sustainable food, and diversifying global supply chains are an attempt to diversify the economy and delay the negative repercussions that climate change may inevitably have.
These factors and more have led to the growth spurt of green bonds, with the market this year looking closer to $1tn than $20bn, showing unprecedented growth.
It stands to reason that the green investment sector is one to watch, with notable holdings such as Ceres Power (LSE:CWR), Powerhouse Energy Group (LSE:PHE), and Verditek (LSE:VDTK).
The first, Ceres Power, has already seen its share prices soar. It has the technology to help build fuel cells, part of a growing trend to provide dependable, low-carbon power generation that complements intermittent renewable sources.
With German engineering giant Robert Bosch planning to spend several hundred million euros to make fuel cells using Ceres Power’s technology, the firm’s shares are advancing with momentum.
In August 2020, Ceres sat at 228.5p, compared to 1134p on Wednesday.
The second, Powerhouse Energy, is yet to see a dramatic increase in its share price, but has announced some auspicious news.
The company’s DMG technology will play a key role in Peel L&P Environmental’s Plastic Park strategy in Cheshire, an operation that creates hydrogen from waste plastics. This DMG technology will then process otherwise unrecyclable plastics.
Finally, Verditek, a UK-based lightweight solar panel manufacturer, recently announced a £3.5 million fundraise.
The company plans to use the proceeds from the placing to provide working capital and underpin its balance sheet. With work already in the pipeline, this cash injection could lead to a considerable growth period for the company.
With such a global priority on adopting green practices and focusing on sustainability, looking to companies such as these could prove to be potentially wise investments.
As the green investment sector’s value has reached that $1tn mark, 2021 will undoubtedly be a ground-breaking year for sustainability.
