- Biodiversity a popular theme
- Access to ESG data a particular concern
- Continued growth in ESG-marketed funds
In a tricky period for investors the focus on investing according to ESG (environmental, social and governance) factors has slipped to the sidelines. However, that doesn't mean ESG investing is dead.
Berenberg’s ESG research found that 62% of global institutional investors surveyed marketed their funds using ESG and a further 22% used ESG analysis in their research without marketing their funds using ESG.
WHAT IS POPULAR WITH INVESTORS?
In terms of themes - biodiversity, the circular economy and water were all proving to be popular themes with investors.
According to Berenberg ESG’s latest research: ‘Biodiversity saw the second greatest jump in interest in our survey of Sustainable Development Goal topics (Goal 16, related to peace, came first) and investors.’
However, Berenberg added that investors’ biggest problem was how to invest in biodiversity, their answer to this was through the circular economy.
In relation to water: ‘Investors still viewed water as an aging-infrastructure, government-funding, decades-old theme. However, we believe water is transitioning into a business resilience risk whereby corporates will need to transition to more resilient water practices to continue to operate in 2023.’
COMPANIES TO WATCH
Berenberg highlighted a few ESG-related companies to watch including cloud engineering software company Autodesk (ADSK: NASDAQ). The company reported fourth quarter 2023 EPS (earnings per share) of $1.86 on revenue of $1.32 billion, beating the consensus for earnings of $1.81 per share on sales of $1.31 billion. Billings rose 28% year-on-year to $2.12 billion, beating the average analyst estimate of $1.93 billion.
Also, on Berenberg’s ‘list’ is Netherlands-based mid cap NX Filtration (NXFIL:AMS). The company’s innovative membranes can filter out so-called ‘forever chemicals’ and are more efficient and use fewer chemicals than traditional alternatives. The company has a new facility in construction, to be completed in the first quarter of 2024.
Berenberg also flags French international multi-service provider (offering textile, hygiene and facility service solutions) Elis (ELIS:EPA), water heating and heat pump company Ariston (ARIS:NBIT) and the largest US steel recycling company Schnitzer Steel (SCHN:NASDAQ).
Schnitzer Steel is little known among European and US investors but has been deemed ‘the most sustainable company at this year’s Davos summit’.
Although investors have expressed concerns with investing in ESG, for example, not enough access to data, a majority of those surveyed by Berenberg indicated that they use the UN Sustainable Development Goals (SDGs) in some way when they discuss their fund strategy.
