Oil majors try their hand at being alternative energy minors

Socially responsible investing is what’s on people’s minds these days. It is purpose-driven, mindful and savvy. These days, investors have access to tools that can assist them in finding stocks that not only meet their financial goals, but also their ethical criteria.

People are investing with their conscience and recently companies producing alcohol, tobacco, weapons or nuclear power are in the no-go zone as well as companies tied to child labor. Currently on the decline, are sectors failing to consider the environment, particularly alternative energy investment?

The ruthless money-shark approach is becoming increasingly outdated as people are increasingly less comfortable profiting from other people’s misery. As a result, the investment industry is now making room for a new caliber of investors, one with ethics on the agenda. Of course this generation is still thinking about monetization, how to build wealth and saving for their futures, but they are doing so without wanting to compromise their values or those of others.

Oil majors are getting with the time

It is not only investors that are growing more aware. The demand for environmentally conscious investments has pushed giants in the fossil fuel business to slowly venture into clean energy and new technologies.

As a result, it is becoming more common for oil supermajors to invest money into renewable energy divisions. Companies like Shell, BP PLC, Chevron Corp and Total SA have all started to invest in renewable energy, retail power, batteries and other non-fossil fuel businesses. Shell has also announced that they plan to cut their emissions by at least 50% before 2050. However, despite acceleration in investments in clean energy solutions, their core business will still remain in oil and gas for the foreseeable future.

These companies are used to the huge profit surges that fossil fuels provide, and may find it difficult to financially and strategically adjust to the rhythms of renewables. This also goes for investors in the energy stock market which have portfolios that include oil stocks. Oil stocks may have a high volatility and can certainly be a risky investment but the rewards can be very lucrative, which will continue to attract brave investors.

The future of the energy stock market

At the moment, there is a shortage of mainstream financial advisors who are knowledgeable about social and environmental investment to direct more investors towards these options. Moreover, even if we follow investment indices that claim to list only environmentally sound companies, there is a lack of regulation on what actually constitutes a green investment.

Many oil and coal companies on these indices have in some ways slightly “greenwashed” their reputations in recent years and have worked towards being labelled as businesses with strong environmental practices. Although some companies are taking steps towards showing more awareness of their impact in the world and have begun to adjust to a certain extent, the more extreme ethical investors may argue whether they should still be included in most ESG indices.

The future of the alternative energy stock market will likely see some changes in the next 100 years but it is not sustainable to expect the fossil fuel market to vanish anytime soon. All the same, we can be optimistic that the companies who have had this type of energy at the core of their business will continue to acclimatize to the current market demand and with the call for renewable alternative energy.