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Big developments in new ESG ratings help for investors – from global leaders MSCI and Morningstar! What are the best renewable energy stocks with reliable dividends? A new day dawns in solar industry stocks as they rise. Will nuclear energy stocks gain traction? State Street launches ETF that screens S&P 500 for ESG exclusions. And morePODCAST: New ESG Ratings Help for Investors. And More…
Transcript & Links, Episode 20, December 6, 2019
Hello, Ron Robins here. Welcome to podcast episode 20 titled New ESG Ratings Help for Investors. And More… for December 6, 2019—presented by Investing for the Soul. investingforthesoul.com is your site for vital global ethical and sustainable investing news, commentary, information, and resources.
And, Google any terms that are unfamiliar to you.
Also, you can find a full transcript, live links to content, and often bonus material to these podcasts at their episodes’ podcast page located at investingforthesoul.com/podcasts.
Please note that in my next podcast on December 20, I’m going to make a really special offer to you!
Now to this podcast!New ESG Ratings Help for Investors (1)
To kick-off, I want to talk to you about some big developments on the ESG company rating’s front that can greatly help you in evaluating investments.
The first is from MSCI which has developed – and made available for free to all investors – an online tool that shows their ESG ratings “[Of] 7,500 companies (13,500 issuers including subsidiaries) and more than 650,000 equity and fixed income securities globally as of October 2019” according to MSCI’s website.
It’s an impressive ESG company rating platform that you should really make use of.
The second and equally impressive change is the revamped Morningstar Sustainability Rating for funds. Morningstar’s Jon Hale explains that “The enhanced version differs from its predecessor in three ways: First, it is focused on material ESG risk, rather than on a broader array of ESG issues, some of which may not be financially material to investors. Second, company ESG risks can now be compared across industries, rather than only within industry peer groups. And third--the new rating is simple and transparent, no longer requiring a complicated calculation.” End quote.New ESG Ratings Help for Investors (2)
By the way, material ESG risk simply means risk relevant to a company’s financial performance.
The Morningstar ESG fund ratings are developed from the more granular company ESG ratings provided by one of the real pioneers and a global leader’s in this space – and that is Sustainalytics.
These new ESG ratings help should provide a boon to investors!3 Renewable-Energy Dividend Stocks to Buy Today
A frequent financial writer appearing in these podcasts recommending renewable energy stocks is Travis Hoium who publishes on the Motley Fool site. In a post titled 3 Renewable-Energy Dividend Stocks to Buy Today he describes why some renewable energy dividend-paying stocks have disappointed and then recommends a particular threesome.
He writes that “Renewable energy stocks that pay a dividend have been hit or miss for investors in the last few years. Many renewable energy asset owners haven't performed as well as expected because they lacked a pipeline of projects that would keep the dividend growing year after year, leading them to sell their businesses to large investors.
Ironically, the renewable energy asset owners that remain are in a better position than their predecessors because they have a smaller pool of competitors looking to buy projects and a project pipeline strategy that has worked for years. Today, the three renewable energy dividends that I think are still worth owning are from NextEra Energy Partners (NYSE:NEP), Hannon Armstrong (NYSE:HASI), and Brookfield Renewable Partners (NYSE:BEP).” End quote.
Go to his article for his reasons for these three.3 Solar Stocks to Buy for a New Day in Solar Energy
Continuing on the renewable energy theme, Larry Ramer, an InvestorPlace contributor has some solar stock picks in his post titled 3 Solar Stocks to Buy for a New Day in Solar Energy.
About these stocks he says that “Solar stocks have really taken it on the chin this year, but the huge declines are totally unjustified, creating a great buying opportunity for longer-term investors. And the recovery could be underway, JunkoSolar stock has added 7% YTD, SunPower stock has added 42% and Daqo stock has added a whopping 60% after a dismal 2018.
The catalyst for the retreat of solar stocks appears to have been a decision by the Federal Energy Regulatory Commission to eliminate ‘a requirement for utilities to offer long-term fixed prices for qualifying facilities.’” End quote.
However, when you read Mr. Ramer’s article he makes it clear that that the Federal Energy Regulatory Commission’s decision would only affect a small number of solar projects underway today. Hence, the market’s new upward reassessment of many solar renewable energy stocks.5 Renewable Stocks To Watch In 2020
And we have more on renewable stock recommendations from an unusual source and with some equally unusual picks. It’s by Anes Alic writing on the oilprice.com site. Her article is 5 Renewable Stocks To Watch In 2020.
Ms. Alic writes about her five stocks as follows:
“1) NextEra Energy Inc. (NYSE:NEE) [as distinct from NextEra Energy Partners] is a Florida-based clean energy company and America’s largest electric utility holding company by market cap. NEE is the world’s largest producer of wind and solar energy.
2) Cosan S.A. (NYSE:CZZ) is a Brazil-based biofuels conglomerate with operations across South America and the U.K. Cosan has interests in the bioethanol space, among other energy projects. The company generates 940 MW of sugarcane bioethanol through its Raízen Energia arm, placing it among the leading producers of bioenergy.
3) JinkoSolar Holdings Co. (NYSE:JKS) [second time recommended in this episode] is the largest PV module manufacturer in the world, with a 12.8% slice of the market. Headquartered in Shanghai, China, the company shipped a record 11.4 GW of modules in 2018 and is on course to exceed that in the current year.
4) Vestas Wind Systems (OTCPK:VWDRY) is the world’s largest wind power company, responsible for more wind turbine installations than any other company, estimated at around 68,000 turbines in 80 countries.
5) MKS Instruments Inc. (NASDAQ:MKSI) While nuclear energy has been gradually falling out of favor as evidenced by shrinking investments, that does not mean that investing in the sector has stopped being profitable. One company that has been defying the odds is MKS Instruments Inc.
The company manufactures a variety of nuclear fuel processing, nuclear accelerator, and uranium conversion systems… [and] holds 600 nuclear-related patents.
In discussing the future for nuclear power Ms. Alic writes that “Nuclear power is presently classified as a sustainable energy source; however, it could become completely renewable if the uranium source changed from mined ore to seawater. Since the uranium mined from seawater is replenished continuously through a geologic process, nuclear energy would become as renewable as wind and solar.” End quote.
Incidentally, some leading environmentalists advocate nuclear energy. Anyhow, I’m on the sidelines of this debate and I’ll leave it to those much more knowledgeable than me to decide on that.State Street launches ETF that screens S&P 500 for ESG exclusions
Moving away from energy, I’d like to talk about one new and unique ESG ETF and that is State Street Global Advisors’ SPDR S&P 500 ESG Screened Ucits ETF. In an article titled State Street launches ETF that screens S&P 500 for ESG exclusions by Jessica Beard, she says that “The SPDR S&P 500 ESG Screened Ucits ETF will track the newly-launched S&P 500 ESG Exclusions II Index. The index methodology has been devised to exclude companies based on data from independent provider of ESG research and ratings, Sustainalytics.”
End of quote, but quoting further, Ms. Beard adds that, ”The exclusion-based approach eliminates exposure to controversial weapons, civilian firearms, tobacco and thermal coal, as well as companies that do not comply with the principles of the UN Global Compact.” End quote.
It wasn’t too long ago that most ethical and sustainable investors employed only negative screens – screening out industries and companies they disliked. Remember ESG criteria today generally does not concern itself with the actual product or services a company produces, but usually only refers to the way a company functions.
Hence, this new State Street ETF should help fulfill a clear need.
Also, it is based on the S&P 500 ESG Screened Index is a great plus.
Well, these are my top news stories and tips for ethical and sustainable investors over the past two weeks.
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Thank you for listening.
Now my next podcast is scheduled for December 20 and as I mentioned I’m going to make a really special offer to you in that episode! So be sure to listen!
Bye for now.
© 2019 Ron Robins, Investing for the Soul.