The confidence of major investors in fossil industries continues to wane. This is shown by stock market developments, but also by Blackrock joining a climate initiative.
Investors worldwide are investing less and less in fossil fuel producers such as coal, gas and oil, preferring instead to invest in renewable energies. For the first time, green stocks generated more proceeds in IPOs than new share issues by fossil fuel producers, with a total of eleven billion U.S. dollars (the oil and gas, related services, pipelines and coal mining sectors were taken into account). The latter sector generated proceeds of ten billion US dollars in the period in question.
This is shown in a recent study by the independent British think tank Carbontracker. Almost 2400 transactions from 450 investment banks were evaluated for this study. The biggest winner of all IPOs in the period is said to be the Danish offshore wind farm developer Örsted. Its shares have risen in value by almost 520 percent since its IPO in 2016.
According to the survey, investments in green stocks have significantly outperformed those of fossil fuel companies over the past decade. The MSCI Global Alternative Energy Index has outperformed the market, i.e. the MSCI All Country World Index (ACWI), by 54 percent over the period. This equates to an increase in value of around $77 billion. The majority of the increase in value is attributable to the past year.
In contrast, the stock market value of coal, gas and oil companies fell by $123 billion worldwide over the past decade despite “the longest and strongest equity bull markets ever recorded,” the report adds. It thus underperformed the ACWI by 52 percent.
“Climate risk is also a material risk for investors today that they can no longer ignore,” writes study author Henrik Jeppesen.