Examining earnings calls we found that ESG topic mentions have been down this quarter, but looking at companies through the investment lens reveals that statements for investments in recycling initiatives have been up when compared to the previous quarter’s earnings. We explore what companies are taking action in that arena.
This week on our ESG Safeguard platform we analyzed earnings calls with an eye for emerging ESG trends and developments. Noticeably this quarter, mentions of ESG topics have been down across most major themes, like renewable energy and carbon emissions. However, one topic had increases in volume when filtering to investments from last quarter’s earnings calls; recycling. This is in line with one of our 5 Themes for 2022, that resource and materials use would gain prominence in the ESG discussion. Today we will focus on those companies driving change in those categories.
Swedish materials company Granges AB, (GRNG:SE) discussed at length the investments they made in a recycling and casting facility in Tennessee. The company believes this will enable them to scale circular economies and bring low carbon footprint aluminum to market. This is one area companies can really drive value for shareholders by reducing input costs. Measures like this are not only environmentally friendly, but also have real financial benefits through efficiency of operations.
Eurocell Plc (ECEL:GB) Invested $4M to increase recycling capacity and infrastructure. The company manufactures construction materials, specifically plastics like PVC fixtures. Plastic is not as easily recyclable as metals so it is encouraging to see more companies rolling out measures like this. It is unclear what the company will be recycling for this implementation, but given their business lines one can assume it is plastics.
As construction companies produce more sustainable materials it helps companies doing the actual building to produce more efficient and environmentally friendly buildings. Infrastructure and the built environment is much more long standing than other manufacturing outputs, so building them with environmental factors in mind has long lasting implications.
Comstock Mining (LODE:US) announced they will be building commercial scale Lithium Ion Battery recycling facilities in Nevada. Lithium recycling has been a hot area of investment recently with many operations taking place in Nevada. We covered other companies in the past that have invested in similar technologies. As electric vehicles become the new normal, there will be increased demand for similar recycling services and companies that can scale these capabilities now will be at an advantage.
As we feel the continuous pinch of supply chains from global unrest caused by the pandemic and continuing Russian warfare in Ukraine, companies will have a financial incentive to recycle materials. In reusing materials companies will be able to buffer their supply chains from global events and be at a competitive advantage. This drives value for shareholders and consumers alike. These companies we discussed today are all investing in materials recycling initiatives that will impact their bottom line as well as their carbon footprint.
Can investors utilize ESG news sentiment to maximize alpha in the short and medium term between the intervals that are covered by ESG advisory firms, ratings agencies, and other peers? We investigated the relationship between short-term (weekly, monthly) and medium-term (quarterly) ESG news sentiment and stock returns. As the title suggests, our results indicate there is alpha, and we walked through the analysis. Watch it here.
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This communication does not represent investment advice. Transcript text provided by FACTSET and S&P Global Market Intelligence.
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An analysis of recent earnings calls reveals that environmental investments remained a strong topic in the news. Specifically, we explore manufacturing and supply chain activity from energy giants Iberdrola and Enel as well as Air Canada making an investment in a carbon capture solution.
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