Growth in the global renewable energy sector has provided investment opportunity for JUNO. Toby Woods, Senior Investment Analyst for Global Equities, who is based in London, explains.
The European Green Deal, the energy crisis caused by the war in Ukraine, and cultural attitudes are driving growth in the renewables sector.
Supporting businesses that develop and own solar, wind, hydro and battery storage assets has become a theme within JUNO, with plenty of good investment opportunities.
Before the recent conflict in Ukraine, it was the European Green Deal that was promoting the sector. Its aim is to reduce net emissions in the EU by 55% from the level in 1990 by the year 2030. It is an ambitious target and is followed by a secondary requirement of achieving climate neutrality by 2050.
The Ukrainian war has upped the stakes, as it brought into sharp focus how much reliance there is on gas and oil supplies from Russia. The EU is racing to diminish its reliance on this source, with a current plan to slash its dependence on Russian imports by two-thirds in 2022 alone. This has prompted many countries to reconsider their energy supplies, with renewable energy being an obvious choice to turn to.
Finally, the consumer is driving demand for more sustainable energy, particularly from younger generations. Populations across the world are becoming more educated and interested in the threat of climate change and recognise the requirement for more diversified energy supplies. Governments, especially of richer nations, can see the support for renewable sources so sustainable energy targets are at the heart of manifesto pledges and fiscal policy both in the short term and long term.
Renewable energy is going to be a critical part of the energy transition required to wean the world off the dependence on fossil fuels. We see this as a multi decade process so, at JUNO, we want to own businesses that have proven to have a good network of development and ownership opportunities to be able to grow with the required demand.
We own two companies in JUNO across this space, NextEra Energy Partners in the US and EDP Renovaveis in Portugal, which have these characteristics. The renewable energy theme is in line with our active management strategy, where our investment team focuses on selecting high-quality, growth companies. We also look for a competitive advantage and a strong management team.
The companies also align with our approach to doing social good.
JUNO considers Environmental, Social and Governance (ESG) matters as part of our investment process. We believe good long-term returns and good management of ESG risks and opportunities, go together.
Our ESG policy means we think about ESG risk and opportunity when we buy, manage and sell our direct investments in companies around the world.
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