Is Renewable Energy a Good Investment Option?
The world runs on energy. Without energy, our lights don’t turn on, we can’t start our cars, or warm up our ovens. We all need energy. Historically, our electricity has been derived from non-renewable energy sources like coal, crude oil, and other fossil fuels. But businesses across many different industries are prioritizing a transition to clean energy and decarbonization. Sustainable energy sources are paving the way for a cleaner and more efficient future. But is renewable energy a good investment option? Not only is renewable energy a good investment option for protecting the environment, it is also good for your investment account. At EGÉA SRI, we focus on sustainable portfolio management and help our clients invest in their beliefs and values.
Renewable Energy
Renewable energy resources are those that will never (or are highly unlikely) run out. Some examples of renewable energy include wind and solar power. Investing in renewable energy is an investment in a better future.
Is Renewable Energy a Good Investment Option?
Renewable energy is on the rise in the United States, making it an excellent investment option. It is the fastest-growing energy source in the U.S., increasing 42% from 2010 to 2020. (And up 90% from 2000 to 2020.) Though renewable energy was once a niche segment of the broader energy industry, it is growing rapidly to become an important source of energy for the U.S.
One recent study found that the renewable energy sector will receive an investment of over a trillion dollars by 2030. There are several factors driving this growth, including growing interest in decarbonization, companies committing to clean energy goals, changes in customer priorities, advancements in technology, and evolution in pricing and contract structures. Investing in sustainable energy companies and green energy companies has never been a smarter idea.
Five Reasons Why Sustainable Energy is a Good Investment
If you’re still not sold on investing in renewable energy, these are five reasons why we believe it’s an excellent investment going forward.
Renewable Energy is Outperforming Fossil Fuel
Yes, you can make some green while investing in green! Investing in renewable energy is not just good for the environment, but it’s also good for your bank account. Over ten year period, renewable energy outperformed fossil fuel, generating returns of 192.3% compared to 97.2%. Not only do renewable energy investments continue to yield higher returns, but they are also less volatile than fossil fuel portfolios.
Companies Are Committed to Reducing Their Emissions
Many major companies like Walmart and IKEA are working with the Science-Based Targets initiative (SBTi) to reduce their emissions. The SBTi, a collaboration between CDP, the UN Global Compact, World Resources Institute, and the World Wide Fund for Nature, is dedicated to giving companies a process to make both meaningful and measurable emissions reduction targets.
Many organizations are committed to taking leadership in their industries by committing to 100 percent renewable energy or net-zero carbon emissions. Over 1,200 companies have put in place science-based targets in line with net zero, according to the United Nations Net Zero Coalition.
Companies are Targeting Scope 3 Emissions
One of the key ways to make meaningful reductions in emissions is by addressing emissions across the entire value chain. There are three categories of corporate emission reductions: Scope 1, Scope 2, and Scope 3. Scope 1 are direct emissions the company makes from things like company offices, company facilities, and company-owned vehicle.s Scope 2 are indirect emissions the company makes from purchased electricity for the company’s use. Scope 3 are indirect emissions the company is responsible for along its supply chain, like the use of sold products, transportation and distribution, and investments and leased assets. Scope 3 emissions usually make up the majority of a company’s carbon footprint, but are also the most difficult to measure and reduce.
Customers are Prioritizing Companies That Make Sustainable Choices
Companies are further incentivized to make sustainable choices as more consumers demand sustainable products and shopping formats. According to a First Insight report, consumers across all generations (from Baby Boomers to Gen Z) are now willing to spend more for sustainable options. Two years ago, only 58% of consumers across all generations were willing to spend more for sustainable options. Today, nearly 90% of Gen X consumers said they would be willing to spend an extra 10% or more for sustainable products, up from just over 34% two years ago. Gen Z also supports brands that also support their own values and causes.
Renewable Energy is More Than Just a Fad
Investing in solar, wind, and other renewables is much more than just a trend. According to a recent study by the Pew Research Center, 77% of Americans believe that the U.S. should be prioritizing the development of renewables over increasing the production of fossil fuels. More green energy investment options become available to the general public every day.
Which Green Energy Companies or Sustainable Energy Company Should I Invest In?
Green energy companies provide a variety of clean energy including solar, wind, hydroelectric, geothermal, and biomass. At EGÉA SRI, we can help advise you on which companies and sectors will be best to invest in. From supplying the best sustainable Roth IRAs to helping choose where to place your investments, we are ready to assist you with your financial and sustainable future.
Invest in Renewable Energy with EGÉA SRI
If you are ready to start investing sustainably, it’s time to partner with us at EGÉA SRI. Renewable energy is not just a trend. It is here to stay. Investing in renewable energy is good for the environment and your investment account. If you are environmentally conscious and looking to grow your portfolio, investing in sustainable energy is an excellent option. Investing in renewable energy is a way to improve the future for all of us. If you want to put your money toward a sustainable future, consider opening a portfolio with EGÉA SRI. Whether you are a high net-worth investor, or just starting your portfolio, our very own chartered SRI counselors™ will help you invest in your beliefs and values. Contact us to learn more.
Disclosure:
Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
