Data from Saxo Group’s equity themes has broken down the top performing ‘green’ stocks with UK investors in what has been a dramatic year for the sector.
The measure of green stocks, according to head of equity strategy at Saxo, Peter Garnry, “is whether a stock has a positive net impact on the environment”.
“For a stock to be green it needs to have a positive impact on this path. In our green transformation basket, we also have companies, which are working with what you could call environmental services, like companies that help clean water, recycle certain materials etc. which we think are benefiting the planet and then of course the companies producing low-carbon intense energy production, like wind, solar etc. speak for themselves,” Garnry added.
Tesla, perhaps unsurprisingly, has been the most popular with Saxo’s UK traders this year, followed closely by its rivals Nio and XPeng.
Two British companies featured in Saxo’s top ten, ITM Power, the manufacturer of integrated hydrogen energy solutions, and Ceres Power Holdings, the clean energy technology company.
UK Top Traded in Saxo’s Green Transformation Basket
| 1 | Tesla Inc. |
| 2 | Nio Inc. |
| 3 | XPeng Inc. – ADR |
| 4 | Plug Power |
| 5 | ITM Power Plc |
| 6 | Blink Charging Co. |
| 7 | Ørsted A/S |
| 8 | Enphase Energy Inc. |
| 9 | Sunrun Inc. |
| 10 | Ceres Power Holdings Plc |
Garnry summarised how different areas of green energy stocks have fared through 2021 and why Tesla has driven the popularity of electric vehicle shares in Saxo Group’s new Future of Energy Q&A.
“It has been a quite dramatic year for the green sector. Primarily due to the increase in commodity prices, solar power has been hit quite hard this year and it has in general taken its toll on energy-producing sectors.”
“The most successful aspects of the green transformation in 2021 have been the green transformation services area as well as the battery and energy storage area, which makes sense as it is connected to the electrical vehicle development,” said Garnry.
“It is evident that Tesla usually is in the top five of people’s holdings and then there’s a natural spill-over effect to other electrical carmakers. It is quite remarkable to see how much the overall valuation of the car industry has gone up since electrical vehicles started to become a thing even though the output hasn’t followed suit. If the market is right, this means that car makers will be able to make larger profits creating electrical vehicles than petrol-fuelled ones.”
Greenwashing
While there are clear incentives for companies to go green, the risk if them labelling themselves as environmentally conscious without their actions matching their words, remains.
Garnry suggests that this is something investors should consider when making decisions.
“That’s why the term greenwashing has come to life. It is the act of companies stating they are green without having true proof of it. This is something that investors and people in general need to be aware of.”