Clean200: Low-carbon corporate investments outperforming those in fossil fuels
By investing in low-carbon products and renewable energy procurement, 200 of the world's largest corporates have continued to deliver strong returns against stock market averages, despite global political, social and economic tensions.
That is a key conclusion of the latest Clean200 report, which ranks the world's largest publicly listed companies by revenue generated from clean energy products every year.
Established by non-profit As You Sow and green media researchers Corporate Knights in 2016, the Clean200 is regarded as a key overview of the corporate competitiveness of renewable energy sourcing and investment into low-carbon products.
Published today (19 February), this year’s report names Google’s parent company Alphabet as the company which generated the most revenue from low-carbon products and services in 2018. 99% of the firm's $111bn revenue was accounted for by 'clean' products during this 12-month period, the report claims. Alphabet has made a string of multi-billion investments into clean energy over the past few years, as part of its drive to power all Google operations with 100% renewable power – an ambition it achieved last April.
The top five is rounded out by technology giant Siemens, carmaker Toyota and US-based IT firms Cisco, and HP. Toyota notably outperformed Tesla in the automotive sector, after experiencing broader uptake of its hybrid-electric, fully electric and hydrogen fuel cell vehicles.
Consumer goods giant Unilever, meanwhile, appears on the index for the first time and is ranked ninth, with 28% of its $60.5bn 2018 revenue accounted for by sustainably-source food products. The firm is one of 87 new additions to the rankings, after the Clean200 introduced seven new sectors to its rankings for this year - namely food and drink, real estate, forestry, mining, fashion, banking and IT.
The index additionally reveals that the Clean200 group of companies have collectively outperformed the S&P global 1200 energy index since 2016, achieving an average 1.29% growth in value, compared to the average of -2.49%.
The Clean200 group did not, however, outperform the S&P 1200 – widely considered the broader market benchmark – in 2018. The index notes that this is largely due to the ongoing trade tensions between the US and China, which have weakened Chinese stocks. If Chinese Clean200 members were excluded from the calculations, the group would be outpacing the benchmark.
“During periods of stock market decline, defensive stocks normally outperform and higher growth stocks underperform,” Corporate Knights’ chief executive Toby Heaps, who co-authored the index, said.
“The Clean200 is overweight on growth companies and underweight on defensive stocks, with no exposure to weapons, tobacco or healthcare - but it has still continued to outperform when the outlying Chinese stocks are excluded. This suggests markets are re-calibrating the value of stocks such as clean energy, that offer a superior and enduring value proposition in a low-carbon economy.”
China notably plays host to the greatest number of Clean200 firms of any nation globally, with 36 corporates on this year’s list. It is followed by the US (34), Japan (19) and Germany (11), with just four UK firms having met the group’s requirements, namely Atlantica, SIG and Delphi Technologies and Unilever.
The publication of the report comes after Clean200’s most recent Carbon Clean ranking revealed that low-carbon energy investments made by corporates in the 18 months leading up to August 2018 had underperformed compared to fossil fuel energy stocks.
According to that analysis, the revenue of the Clean200 companies had risen by 16.5% between 2016 and 2018, compared to a 23.5% increase for their fossil fuel benchmark.
These findings marked only the second time since 2016 that fossil fuel investments have outpaced clean energy stocks and were, according to the Clean200, largely accounted for by the “China effect”.
The group noted that removing Chinese firms from the list would see the Clean200 continue to outperform fossil fuels, generating a 35.2% return over the past two years compared to the 23.5% figure.