The usage of ESG—environmental, social, governance—criteria has become a significant trend in the world of investing. In his piece in Real Clear Energy, Graham Copley, founding partner of C-MACC, a chemical consulting firm, and co-CEO of Issaquena Green Power, examines the performance of traditional energy sources during the rise of ESG. Copley notes that ESG has made its way into the political realm as well, with the Biden administration leaning into tax credits that promote ESG through legislation such as the Inflation Reduction Act.
Critics of ESG content that activists are imposing ‘wokeness’ on traditional energy sectors, harming the very resources we need to operate. For example, Environmental law firm, ClientEarth, is suing all eleven members of Shell’s board of Directors in their personal capacity, alleging the directors have mismanaged climate risks. Drawing attention to a ‘first-of-its-kind lawsuit,’ Copley says, “allowing frivolous lawsuits to distract companies from strategies that seek to balance the complex challenge today of ensuring energy supply, while at the same time managing the energy transition, is a mistake.”
In this new era of investing, “one fact rises above the rest: traditional energy companies will likely perform for your portfolio in 2023,” Copley says. As economies across the globe expand, especially rebounding from the pandemic, natural gas investments are likely to increase with rising demand. Similarly, natural gas growth has significant potential in emerging markets, such as India, that are transitioning from coal, wood and biofuel usage towards cleaner fuels. As global demand is projected to grow, the U.S. has continued to expand LNG export facilities and infrastructure to accommodate this. Copley writes, “It is clear oil and gas will remain an essential part of the global energy mix. Investing in these more conventional energy companies is likely a net positive for investors’ portfolios, providing steady returns and healthy dividends over the long-term.”
Read Graham Copley’s piece here: Despite ‘Woke’ Investing, Traditional Energy Performs