The Ethical Investor: ESG moves this week, and why eInvest likes this ASX emissions control specialist
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The Ethical Investor is Stockhead’s weekly look at ESG moves on the ASX. This week’s special guest is eInvest’s co-head of ESG and Equities Analyst Emilie O’Neill.
The UN General Assembly held this week brought a rare show of solidarity from the two biggest economies.
Both the US and China told world leaders at the annual gathering they would do their part in the fight against climate change.
President Biden made a pledge to double US financial aid to developing countries to help them switch to cleaner energy.
President Xi meanwhile said that China will stop building coal power stations overseas.
“China will step up support for other developing countries in developing green and low carbon energy, and will not build new coal-fired power projects abroad,” he told the Assembly.
China is the world’s biggest emitter of greenhouse gases, and is also the largest financier of coal power internationally. More than 70% of coal-fired power plants around the wold currently rely on Chinese funding.
Here’s a snapshot from that Influence Map data showing the top 15 Aussie companies that have engaged their strategies toward the Paris-Aligned climate policy.
The higher the total score, the more the company lobbies to support Paris-Aligned climate policy.
As the ESG narrative continues to shift, more ESG-related litigations are also starting to pop up.
This month, a Commonwealth Bank (ASX:CBA) shareholder took the bank to the Federal Court.
The shareholder told the court he wants to inspect “all documents created by the bank in relation to its gas and fossil fuel projects”, claiming that CBA might be in breach of the Paris Agreement goals.
ESG litigations are also happening overseas, where in Germany a former employee of asset manager DWS claimed in court this week that the company overstated its EGS credentials.
Meanwhile, Deputy Prime Minister Barnaby Joyce told the ABC he would be supporting the country’s 2050 net zero goal, as long as it doesn’t hurt exports from the rural farming communities.
Prime Minister Scott Morrison has earlier said that Australia was on track to “meet and beat” its 26-28% reductions on 2005 levels by 2030, on our way to zero carbon by 2050.
ESG investing and returns: Can you do both?
As it becomes more obvious that issues like climate change and diversity need to be addressed, more investors are looking to invest in companies that perform well on ESG, otherwise known as sustainable investing. It sometimes seems counterintuitive that this can also lead to good returns, but to date investors in the eInvest Better Future Fund (ASX: IMPQ) have experienced that the two can go hand-in-hand.
A great example of how investing in technology that is being used in the battle against climate change can also deliver strong returns is Calix (ASX:CXL) which is up over 450% over the last 12 months and has been a holding in IMPQ for a number of years.
What does Calix do?
Calix is an industrial solutions company dedicated to solving global sustainability challenges. One of the uses of their technology is a process to separate carbon dioxide in the lime and cement production process. This process has been put through its paces as part of Project LEILAC – in collaboration with some of Europe’s largest cement and lime companies.
The lime and cement industry is responsible for ~9% of global greenhouse gas emissions and therefore addressing the emissions in this sector is critical as we progress towards a net zero emissions economy.
Why the increased interest?
Calix has announced partnerships with some large global companies on projects to help decarbonise their operations. For example, it executed an agreement with AdBri (formerly known as Adelaide Brighton) to co-develop a Calix calciner for lime production with carbon dioxide capture. Lime is used for producing steel, aluminum, rare earths, and gold however it emits 1 tonne of carbon dioxide for every 1 tonne of lime that is produced.
Calix also signed a memorandum of understanding with Pilbara Minerals (ASX:PLS) to develop a midstream lithium chemicals processing plant for a low-emissions lithium salt as an input for lithium batteries. It has also announced MOUs with Tarmac for a lime calciner project in the UK and RHI Magnesita to advance carbon dioxide emissions reduction in the refractory industry.
Who else likes the Calix technology?
Calix recently announced that a New York based impact investor, Carbon Direct Capital Management, took a 7% stake in Calix’s LEILAC business for A$24.5 million, valuing the project at about A$350 million. This received a lot of interest, particularly as this is just one of a number of promising technologies that Calix is developing.
RPMGlobal Holdings (ASX:RUL) will acquire 100% of Perth-based ESG services company, Blueprint Environmental Strategies.
ESG-related work within RPM has grown materially since it established a separate ESG mining division, and acquired Brisbane based ESG company Nitro Solutions in July.
Balkan Mining and Minerals (ASX: BMM) has signed a Marketplace Platform Agreement with Puro.earth, to kick-start the market for carbon negative lithium and borates.
Puro.earth is the world’s first B2B marketplace focused solely on carbon removal.
Under the deal, BMM and Puro.earth will work bilaterally to secure a long-term purchase agreement with appropriate verified suppliers of CO2 Removal Certificates.
Westpac (ASX:WBC) released its ESG strategy update this week, highlighting the fact that all of Austrac’s legal claims against the bank have been closed, but acknowledging that further work by Westpac to eliminate financial crime is required.
Fund manager Australian Ethical (ASX:AEF) is launching one of the only ‘100% ethical’ multi-asset high growth funds in Australia.
The fund will have an opening balance of $250 million, and invest in markets such as climate technologies, renewable energies, medtech and biotech, as well as unlisted property holdings.
Retailer Coles Group (ASX:COL) has officially been ranked the number one food retailer in Australia for sustainability – and second across the globe – in the World Benchmarking Alliance’s (WBA) 2021 Food and Agriculture Benchmark.
The WBA has assessed and ranked 350 of the world’s most influential food and agriculture companies.
In a statement, the WBA said that Coles “ranked first among its retail peers in social inclusion, while landing among the top five in nutrition, and top 10 across the governance and strategy, and environment measurement areas.”