The red carpet for environmental, social and governance (ESG) investing has been rolled out with the prospect of a Joe Biden presidency. Investors looking for broad-based exposure to alternative energy can give the SPDR Kensho Clean Power ETF (CNRG) a look.
CNRG seeks to provide investment results that correspond generally to the total return performance of the S&P Kensho Clean Power Index, which is designed to capture companies whose products and services are driving innovation behind clean power. The fund may invest in equity securities that are not included in the index, cash and cash equivalents or money market instruments, such as repurchase agreements and money market funds.
All in all, the fund gives ETF investors:
- Exposure to an index utilizing artificial intelligence and a quantitative weighting methodology to capture companies whose products and services are driving innovation behind the clean energy sector, which includes the areas of solar, wind, geothermal, and hydroelectric power.
- An effective way to pursue long-term growth potential by investing in a portfolio of companies involved in the transition to lower emission generating power supply.
The news certainly rallied the markets around ESG during Monday’s trading session that saw the Dow Jones Industrial Average rise 800 points. More specifically, the MSCI ACWI ESG Focus jumped 1.25% on the prospect of a Biden presidency.
The optimism is certainly warranted. The induction of Biden as president should fall in line with his plans for energy efficiency.
Political Tailwinds for ESG
“First, the next U.S. President – the CEO of the world’s largest economy – and his Vice-President Kamala Harris, actively championed on the election trail and before, values that have an inherent synergy with ESG-orientated investments,” said Nigel Green, Chief Executive and Founder of deVere Group, in an email. “They campaigned on issues including climate change, social justice, equality, diversity, human rights and corporate transparency and accountability.”
“On many issues, particularly those relating to the environment, the Biden administration is aiming to reverse policies established by Trump,” Green added. “For instance, Biden has promised to bring the U.S. back into the Paris Agreement, the multi-nation pact to combat climate change, on day one of taking office, and called for a transition in America from fossil fuels to renewable energy.”
This bold plan should continue to provide tailwinds for ESG over the next four years.
“Biden has bold plans that perfectly square with ESG investments – an already burgeoning market,” Green said. “We can expect the boom to intensify further.”
For more news and information, visit the ESG Channel.