Welcome to Greenify! A weekly newsletter providing you with 3 of the most important news and some crucial deep dives on matters such as #energytransition #decarbonisation #climatetech! We believe that a clear understanding of these topics is essential to thrive in the world of… TODAY!
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📌 Fact of the week
Russian gas producer Gazprom has cut off gas supplies to Orsted and Shell Energy, following the two companies’ failure to make payments in roubles. Find out more about Orsted on Greenify #4.
Hottest news of the week...
Regulation 🗃 – German Police On Fire! 🔥
What happened: On Tuesday, German prosecutors raided DWS’ offices over allegations of “greenwashing” investors. DWS (Deutsche Asset & Wealth Management), is a German asset manager 80% owned by Deutsche Bank (also raided by prosecutors). Essentially, a whistle-blower inside the company told the authorities DWS was lying on its investment prospectus, misleading investors on the sustainability credentials of some of its financial products. German prosecutors said “sufficient factual evidence has emerged" that ESG factors were taken into account in a minority of investments "but were not taken into account at all in a large number of investments". In the meantime, DWS’ CEO has resigned following the accusations.
Zoom Out: As we have already discussed in past Greenify editions, greenwashing is an unfortunate by-product of an increasingly ESG focussed financial ecosystem. Asset managers are responding to investors’ environmental requests by gearing their portfolio towards more sustainable companies, avoiding big emitters and backing ESG winners. However, this is easier said than done in most cases. Today, it remains fairly easy for a company to be considered an ESG friendly investment; in this case, however, it looks like DWS has brought greenwashing to an extreme!
Business💰- AGL Shake Off
What happened: Billionaire climate activist, Mike Cannon-Brooke, stopped Australia’s largest polluter AGL from spinning off its energy generation business from the retail one, saying it would have delayed the closure of its three coal power plants. The activist investor, currently owning ~11% of AGL started a campaign to stop the spin'-off and rather proposed to use AGL’s profits to fund renewable investments! The activist campaign was successful and the current management team is set to resign this week! 😮
Zoom Out: AGL accounts for roughly 8% of Australia total emissions! This data is partially due to its three coal-fired power plants, which have been at the centre of public debate for long. In fact, we talked about this story in Greenify #1, when Cannon-Brooke first tried to take AGL private and greenify it. The acquisition failed, but the activist investor found himself with 11% of the company and decided to activate its plan B: engage with AGL’s board and campaign against the demerge, as he said the split is not aligned with Paris Agreement climate targets. 🚫
Innovation💡- Water Is Everywhere 💧
What happened: On Tuesday, the most promising Israeli start-ups presented demos of their climate tech solutions to UN ambassadors, in an event organized by Start-Up Nation Central. Among the best innovators was WaterGen, a company which developed a technology capable of producing clean and safe drinking water from the air. Its patented technology protects it from copycats, and its product portfolio includes solutions for residential, commercial and mobility uses. Check it out!
Zoom Out: Access to basic drinking water is, and will be, a key challenge for our planet. Morgan Stanley estimates the gap between global demand and supplies of fresh water to reach 40% by 2030, and estimates already one quarter of the world’s population does not have access to safe drinking water. 😢Many innovative ideas are now geared towards trying to solve this challenge, including ones by celebrities the likes of Jaden Smith!
Deep dives of the week…
Graph of the week – China King
We got the idea for this week’s chart by stalking Elon Musk on Twitter. As he put it “few seem to realize that China is leading the world in renewable energy generation and electric vehicles. Whatever you may think of China, this is simply a fact.”
Source: The World of Statistics, Twitter
Company of the week – Dragonfly lands on the Nasdaq!
In Greenify #12 we mentioned Amprius Technology going public on the NYSE, but it’s not the only battery company going public! We are talking about Dragonfly, a producer of solid state batteries who has patented a cheap and scalable manufacturing process. All Solid-State Batteries (ASSB) have a solid electrolyte, instead of a liquid one, and are lighter, smaller, completely non-flammable, and, if mass-produced, potentially cheaper! The company has been listed on the Nasdaq through a SPAC and will be trading under the new ticker DFLI.
Analysis of the week – Climate Activist Investing is cool 👌
What’s that?🤔
Activist investing is the art of acquiring sufficient amount of shares in a public company to be taken seriously by other investors and then start advocating for your plan on how to run the company, whatever that is! Until some years ago it was mainly used by investors believing the company was run poorly to implement new strategies. Nowadays it’s used very often to change the environmental behaviour of companies!
Does it work? 🔎
If you read the Business News above, you should already know the answer😉. If you need more evidence, a study by Chu and Zhao (2019) collected toxic chemicals emissions data by companies and analysed changes in activist targeted firms, relative to untargeted ones. They found that targeted firms reduced releases of toxic chemicals, both at the plant level (20%) and at the firm level (40%). Then, they also sorted targeted firms into 2 portfolios based on decrease in toxic releases after activism and found that 4-year returns were higher for the firms experiencing greater decrease in toxic releases!
What’s the trend? 📈
Whether they are concerned with climate change or they are scared of climate risk impacting their assets, more and more institutional investors are becoming climate activists. A study found that among large institutional investors, only 16% had taken no recent engagement actions on climate topics with their portfolio companies. A softer approach to activist investing is done through letters and public statements, with the most famous being Larry Fink’s (Blackrock n1) 2021 “Letter to CEOs”, where he recommended companies to take climate risk seriously!