From the desk of
Doug Couden, CFA
With companies and investors increasing their public commitments to sustainability related goals, the transition process presents the opportunity for investors to help enact real change. However, meeting these goals means different things for different sectors and different companies - some will need to fundamentally change what they do and how they do it, while others can achieve their targets with more modest shifts.
From Concept to Reality: The Next Phase of the ESG Transition Is Here
Although moving to a more sustainable future is clearly desirable and presents an array of investment opportunities, transition does not come for free and the question of who should bear that cost sits largely unaddressed given the intersection of government and corporate policies. For investors, there is also the question of whether it is better to invest in sectors (and companies) that are more advanced in their transition process or those that are just starting out given the costs and potential return trade-offs involved.
4
Chief Investment Officer,
Partner
BakerAvenue's Primary Environmental Screening Factors
11% Waste Management
Sources: Bloomberg, BakerAvenue
Increased Need for Energy
Data centers, especially those for A.I. models, require a constant energy source such as natural gas, for 24/7 operation, but renewables will still be significant due to the green electricity commitments of many companies. Goldman Sachs estimates the U.S. will need 47 gigawatts (GW) of new power generation capacity by 2030 to meet data center power demand. This capacity is expected to be divided 60%/40% between natural gas and renewables, balancing the reliability needs of data centers with companies' green energy commitments.
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Source: EIA, Goldman Sachs GIR.