The Clean Energy Transition is not ESG

“This article is just so obviously true!” writes former RAO Global speaker Mark Campanale “It justs needs saying so again and again: "The Clean Energy Transition is not ESG". The article he’s referring to is in the Climate Capitalist and can be read in full here.

"Environmental, Social and Governance (ESG) investing is at an all-time high, with $30 trillion in total global investment assets, which compares impressively with the market cap of the S&P 500 of $40 trillion.

ESG has significant value because companies that score well on the environment are probably working hard to cut emissions and other types of pollution, but ESG is in a different zip code than investing in the Clean Energy Transition (CET). CET means massive investments in the companies and projects that will cut fossil fuels from the four big emission sectors: electricity generation that powers the grid, vehicles (transportation), homes/buildings and general industry.

CET investing needs to ramp up much faster than ESG, to the tune of $3 to $5 trillion each year (or about 5% of global annual GDP) to get anywhere close to the 1.5 Centigrade goal. Good ESG companies (across all sectors of the economy) are working to cut emissions by utilizing CET technologies and services.

The most important CET investment options don’t score well on ESG or aren’t scored at all. Tesla is the most important CET company on the planet but has a poor ESG score because of Social and Governance issues".

The table at the end looks at CET sectors, ETFs and publicly traded companies across the globe and shows that CET public equity solutions are on their way.