The issue of sustainability has undergone something of a shift in the minds of investors in recent years. At first it was mainly about excluding companies from industries with poor track records, but now the emphasis is much more on the investment opportunities that are arising. As an active investor focused on sustainability, the trick is to steal a march on the market and identify companies that are either already writing their transformation story or are ready to move in that direction.
By being on the front foot when it comes to sustainability, companies and investors are also helping to stem the effects of climate change. If sustainability is to be a process rather than a utopian ideal, then our role as an active investor is to find and support businesses that are making a genuine effort to change. In our new series, we shed light on the opportunities presented by this transformation in all key sectors.
Union Investment’s new ESG transformation rating
We invest in companies that already have great sustainability credentials. But going forward, we will also place a stronger focus on those who have credible ambitions to improve in this respect. After all, today’s caterpillars are the butterflies of the future. The UniESG TransformationRating was developed to help with this approach.
Issue 1: Chemicals
Transformation is necessary in the chemicals sector and the pay-off is big. But what are the defining features of the chemicals companies that have gone all in on sustainability?
Issue 2: Mobility
In the fight against climate change, there must be a significant reduction in harmful CO2 emissions and thus a transformation in the automotive sector. However, there must not only be winners in this process.
Issue 3: Utilities sector
Our modern life is hardly imaginable without electricity. But electricity generation has an ecological problem: it is still relatively heavily based on fossil fuels. How can the sustainable transformation and thus the decarbonization of the utility sector succeed?
Issue 4: oil and gas sector
Fossil fuels still cover the majority of global demand for primary energy. How can the oil and gas sector achieve the necessary substitution with renewable energy sources on the one hand and more CO2-efficient energy production from fossil fuels on the other?
Issue 5: The consumer products sector
Fast fashion still has many fans. That is why it remains a fast-growing and successful part of the business for many fashion companies. But harm to the environment, non-transparent supply chains, and working conditions that are increasingly viewed as problematic are giving more and more consumers and investors pause for thought.
Issue 6: Could banks be the trump card in the fight against climate change?
At present, companies that are significant contributors to the enormous volume of carbon emissions worldwide still receive support from banks in the form of loans and underwriting services for their bond placements. But ever more stringent regulation and pressure to mitigate climate change are forcing the sector to rethink and adjust its business models.
Issue 7: Real estate needs to become greener
In the fight to mitigate climate change, a green transformation of the real estate sector and – more specifically – of the existing building stock is therefore urgently required, in Germany as well as in other countries. But what are the prerequisites for a successful transformation and what regulatory hurdles need to be cleared?