Three years after the death of ESG, green stocks hit $10 trillion in market value
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It’s been almost three years since investors soured on the marketing term ESG to describe green stocks and companies committed to good governance and diversity, yet the stocks behind the movement have kept their promise.
While the term ESG (environmental, social, governance) is dead, the market value of renewable energy and other green companies has soared and this spring topped $10 trillion in value, according to a new report by the London Stock Exchange Group, cited by Bloomberg.
Driving the growth in stock prices are revenue gains, which have climbed to more than $5.5 trillion, the report said. Mergers and acquisitions in the green energy space have also pushed stocks higher, with the S&P Global Clean Energy Transition Index rising 80% in the past 18 months, twice the gains of the S&P 500.
The gains have come despite concentrated efforts in the U.S. in particular to hobble the climate finance movement and push the economic needle back toward oil and gas. The International Energy Agency said earlier this year, however, that of the $3 trillion in growth in energy investment in 2024, more than two-thirds were renewables.
For investors, it’s a reminder that when it comes to markets, revenue is what matters, not politics. While governments can and will impact revenue with their policies, good companies with good ideas can often find a way to keep growing. In the middle of an oil war and rough year for climate policies, globally, that is good to remember.
Don’t forget to contact me directly if you have suggestions or ideas at dcallaway@callawayclimateinsights.com.
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Zeus: Trump running out of time on energy prices
. . . . Less than 48 hours after the Iranian ceasefire this week that was supposed to be final, President Donald Trump was already talking about bombing again, reflecting a timeline toward the midterm elections in November that is increasingly running out, writes David Callaway. With energy prices still high only four-and-a-half months before the elections and the Strait of Hormuz only marginally open, and with interest rates threatening to rise under Trump’s hand-picked Fed chairman, the White House is in danger of needing to rewrite its elections playbook. Voter anger against data centers is rising and gasoline will still be higher through the end of the year. Redistricting hasn’t worked. Callaway analyzes what the White House might try next and what it means for investors.
Thursday’s subscriber insights
Anthropic lends its AI halo to carbon removal
. . . . The nascent industry to remove harmful carbon from the atmosphere, shocked to its core earlier this spring by Microsoft’s MSFT 0.00%↑ announcement it would pause all deals for the time being, was thrown a lifeline this week when the carbon removal collective Frontier said that AI giant Anthropic would join a new round of financing that would double its buying power to $1.8 billion.
Anthropic is the first of the AI giants to make a move on climate change, joining Google GOOGL 0.00%↑ and others in the four-year-old Frontier to fund projects to remove carbon in exchange for carbon credits that can be used against their pollution. Projects include sucking the carbon out of the air or crushing rocks to leverage their own natural carbon-sucking abilities. So far Frontier has spent about $700 million on about four dozen projects, according to reports.
The addition of Anthropic caught the eye of carbon removal advocates because the company has developed a reputation among the AI crowd as sort of a white hat that uses its developing technology for good. Its well-publicized spat with the Trump administration over its proposed use of AI in war has only enhanced that halo.
Any involvement among the big AI companies in fighting climate change is welcome. AI is always billed as a potential savior on complex issues, and global warming certainly qualifies. But for our money, it might be more useful for Anthropic, as well as OpenAI and Elon Musk’s SpaceX SPCX 0.00%↑ to spend their funds on using clean energy in their data centers.
Anthropic mostly contracts its data centers from companies such as Google and Amazon Web Services, so it is at the mercy of the energy they use; mostly a mix of natural gas with a smattering of energy from green sources such as geothermal or nuclear. Buying renewable energy directly would move the needle more.
For carbon removal enthusiasts, however, this week marks a turning point in what was rapidly becoming a very bad year.
Editor’s picks: LNG tax credits probe; plus, climate risk for data centers
Watch the video: Inside Climate News Senior Editor Corey Mitchell, reporter Phil McKenna and data journalist Peter Aldhous discuss a new Senate probe over tax credits to the country’s largest exporter of liquefied natural gas. Liquefied natural gas vessels are fueled by their cargo — they’re built specifically to make use of the gas boiling off from their tanks. But Cheniere Energy, the largest U.S. exporter of LNG, requested “alternative fuel” tax credits for that. The claim baffled shipping experts, because what Cheniere Energy is doing isn’t, in any real sense, an alternative. It also provides little climate benefit over fueling the vessels with diesel and uses the credit in a way that tax specialists say was never intended.
Many AI data centers have high climate risk
Nearly 80% of new data center capacity around the world is at high risk from extreme climate hazards such as flooding, damaging storms and wildfires. So says a new report from climate risk analytics firm First Street. Such weather events could disrupt operations, increase downtime and increase insurance and repair costs at the 97 global data center markets in the report. CNBC, citing the report, notes that data centers are typically expected to be in operation for 20 to 30 years, and investors may not be weighing long-term conditions affected by climate. “Most underwriting for real assets still uses historical data, but the climate is no longer behaving the way the historical record would predict,” First Street CEO Matthew Eby said in a news release. “As heat, drought, and water stress increase, outdated models simply don’t offer a complete view of risk anymore.”
Latest findings: New research, studies and projects
Northeast states study offshore HVDC transmission
A group of nine states in the northeast and the District of Columbia are planning an offshore transmission network to bolster wind energy development, Utility Dive reports. The project, called the Northeast States Collaborative on Interregional Transmission, earlier this week published a trio of reports around technical standards and policy recommendations to advance a high-voltage direct current network. While the Trump administration has been opposed to wind development, Utility Dive notes this comes as the U.S. Court of Appeals for the 1st Circuit granted a U.S. Department of Interior request to drop its defense of a ban on wind projects. Attorneys general from 17 states and Washington, D.C. challenged an executive order attempting to block wind power development in the U.S.
Words to live by . . . .
“I’m glad people are connecting the dots. I think, at the moment, if you pursue better climate policy, the benefits to households, for the country as a whole, would exceed the costs.” — Kimberly Clausing, UCLA law professor, speaking about new research that shows Americans across political parties agree that global warming is raising the cost of living.