The popularity of environmentally friendly processes has declined in 2022. But 2023 may hold much more success for them.
For some, the decline in investor interest represents an opportunity for what they see as an inevitable push toward sustainability.
1) CLIMATE CONCERNS
Many big names in the oil and gas industry are getting ahead of the curve to adapt before regulatory requirements force them to do so. Occidental Petroleum (OXY) is ahead of the curve to achieve zero regardless of a government mandate.
In 2022, OXY broke ground on the first direct air capture (DAC) plant in the Permian Basin, the largest source in the United States. DAC plants act as a sort of fog vacuum and extract carbon directly from the air before pumping it below the surface as a permanent, safe and viable solution or reusing it for industrial purposes.
In addition to being climate friendly, this initiative represents a strategic business plan, as the carbon extracted from the atmosphere can be sold as raw material for industrial use, as indicated, or as credits to offset third-party pollution, while other countries are catching up.
As a result, OXY sees carbon capture as a business model in its own right – with strong prospects.
2) THE CIRCULAR ECONOMY
The old slogan “reduce, reuse, recycle” is once again relevant and is one of the fundamental principles of the circular economy concept.
According to the U.S. Environmental Protection Agency, “a circular economy is one that reduces the use of materials, redesigns materials, products, and services to be less resource-intensive, and recovers ‘waste’ as a resource to make new materials and products.”
H&M is one of the first “fast fashion” brands to shed the negative associations of the industry and embrace circular concepts.
Much of the technical innovation in the circular economy is about packaging, especially reducing or changing it into something that is not harmful to the environment.
While many national and international governments are working to eliminate plastic waste by banning straws and other single-use plastic items, companies are finding ways to maintain their brand and quality while taking a circular approach.
H&M (HNNMY) is one of the first fast fashion brands to shed the negative associations of the industry and embrace circular concepts.
This includes innovations such as:
1. Switch to mono-materials for many garments. Mono-materials favor recycling, especially when they are natural, such as cotton or wool.
2. H&M has developed new bio-based materials. Made from rice husks, coconut fibers and reinforced with natural rubber, they are used in sandals and jewelry.
3. New polyester manufacturing techniques increase recyclability.
4. AirCarbon techniques allow for the creation of jewelry and accessories from captured carbon.
3) ALTERNATIVE ENERGY
Alternative energy has seen a resurgence of interest in recent years, as events such as the Russian-Ukrainian conflict and the actions of Opec have driven up fossil fuel prices.
Alternative energy companies also enjoy being one of the few areas where governments actively and financially encourage their use and adoption. For example, the United States has announced substantial tax credits for consumers who adopt solar technology, and companies like First Solar, Inc (FSLR) have reaped the benefits.
FSLR is one of the few unprofitable technology companies whose valuations have nonetheless climbed in the face of an impending recession, largely due to the prospect of waves of customers collecting solar credits by purchasing their equipment:
As the only U.S. producer of thin-film PV systems, FSLR has the comparative advantage of having systems with the lowest net carbon and water impact.
Companies that do not stay ahead of their competitors may find themselves in trouble when legislative action requires compliance, and investors who ignore the trend may underperform.
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Source: Allnews | 17 Apr 2023 | Paul de La Baume, FlowBank.
Paul de La Baume has joined FlowBank as Market Strategist in December 2021, and will become Senior Market Strategist. Responsible for investment strategy, he will also play a key role in the evolution of the bank’s digital content offering. Previously, Paul was an investment advisor for private clients at Lombard Odier in Hong Kong.
FlowBank is a Swiss digital bank based in Geneva, which employs nearly 120 experts. Founded by Charles Henri Sabet in 2020, FlowBank aims to make the financial markets accessible to everyone, thanks to intuitive investment platforms, trading courses taught by seasoned experts, and highly competitive prices. Both private and institutional clients can invest in a wide range of assets through the FlowBank and FlowBank Pro platforms.