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Green Finance perspectives in 2020

Is Green Finance the Best Investment for 2020?

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In 2019, green energies convinced investors of its long-term sustainability. It looks like 2020 could become key for companies who are playing a role in this so-called “green finance” movement.

Since politicians are encouraging private investors to take part of eco-friendly initiatives, old companies, such as gas and electricity providers have created new departments dedicated to renewable energies. 

Within a few years, the public opinion has become increasingly interested in this trend and several startups that recently launched their IPOs might become the best investment of the sector this year. 

Green energies are on the rise

With a soft launch in the nineties, green energies have become increasingly popular in the early 2000s. Last year, companies’ shares linked to “green finance” rose on average by 33% on the stock market.

According to the WilderHill New Energy Global Innovation index, “listed clean energy specialists in the world, rose by more than 33% in 2019″, confirms French newspaper Le Figaro.

Moreover, according to the Pictet AM institute, the cost of production for solar energy has dropped by 80%. On the other hand, wind power’s price has dropped by almost 45%.

Read on Alvexo: “Canada’s Legal Cannabis Market Refuses to Meet ‘Green Rush’ Expectations”

Energy giants are transitioning

With an increasing interest in green energies, shareholders of key energy companies have been able to make their voices heard. As a result, key companies such as EDF or Engie in France for example, opened dedicated departments.

In Spain, Italy and Portugal, national companies have also followed the trend. As a result, Spanish Iberdrola experienced an exponential 2019 year with a +36% increase in its stock market share.

In Italy, Enel also had a very productive year, as it share soared by 40%. Same for Portuguese EDP, whom share increased by +27%. French Engie’s rose by 16%. However, historical EDF shares dropped by 27%, mainly because of months-long strikes in the country.

Banks are getting involved

On another note, the financial sector has been very attracted to the idea of being part of the green finance evolution. As a result, many banks have dedicated departments within their headquarters.

“AM Postal Bank, Amundi, AXA IM or BNP Paribas AM now incorporate environmental, social and governance (ESG) criteria”, explains Le Figaro.

And while traditional bank shares seem like a safe bet, startups that recently launched their IPOs might become the best investment of the year.

For example, French Agripower’s share launched at €6,70 in November. It is now traded at €10,50 at CAC 40. Another example: Neoen, whom share has almost doubled since its launch in 2018, going from €16,50 to currently €30.

On 13 January, the European Commission unveiled a trillion-euro “green deal” financial plan, only confirming experts’ trend forecast.

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.