Yesterday I mentioned that Lehman Brothers had released a 145-page research
note on climate change. In response, a friendly reader sent me a similar report
from Citigroup (120 pages, dated January 19), and said that UBS might have one
out as well. Interestingly, the Citigroup report came out of the New York office
– and although it’s similar in structure to the Lehman report, it’s more
optimistic about the list of 74 companies which it says "seem well positioned
to benefit" from climate change-related trends. It strikes me, however,
that those 74 stocks – which I’ve summarized after the jump – are
overwhelmingly in the energy sector, one way or the other, and I’m sure that
quite a few of them would be anathema to "green" investors.
So, what are the companies? Some of them, Citi admits, are not very environmentally
friendly at all. For instance, they write of RWE: "Despite emitting about
90 million tons of carbon dioxide, or about
10% of Germany’s total, this “dirty” utility has been enjoying
windfall profits in the EU Emissions Trading Scheme"; they also say that
TXU Corp, which is building lots of coal-fired power plants, is seeking to take
advantage of the fact that the US doesn’t have carbon emissions restrictions.
And most of the rest are based in one way or another on energy. Acciona and
Iberdrola have many clean technologies; there’s also Gamesa and Vestas in wind;
Conergy, Evergreen Solar, Q-Cells, Sharp, SolarWorld, Sunpower Corp, Suntech
Power, in solar; and Ormat Technologies in geothermal; and Allegheny Technologies,
Constellation Energy, Electricité de France, Entergy, Exelonin, Fortum
Oyj, FPL Group, Shaw Group, and Siemens in nuclear. Gas stocks are seen as doing
well too, so BG group, Centrica, Gaz de France, and Gazprom make the list.
Related are the ethanol and biodiesel plays: ADM, Bajaj Hindusthan and Balrampur
Chini Mills in India (ethanol from sugar), Brasil Ecodiesel, Bunge, Cosan, CropEnergies,
Deere, DSM, DuPont, Ebro Puleva, IJM Plantations, IOI Corp, KL Kepong, Monsanto,
Neste Oil, Noble Group, and Syngenta. Also listed are Potash Corp of Saskatchewan
and Terra Industries, which sell the nutrients which allow all these companies
to grow those crops.
There’s the carbon-trading plays: AIG, The Chicago Mercantile Exchange GFI
Group, and Swiss Re.
And there’s carbon-reduction companies, like BorgWarner and Magna International
in auto parts; Compagnie de St Gobain in insulation; Emerson, Itron, Johnson
Controls, Schneider Electric, and SIG PLC in energy; Philips in lighting; and
Honda, Peugot, Toyota in smaller, more energy-efficient cars,
Finally, Citi reckons that water in drought-hit countries will become more
valuable, so Aguas de Barcelona makes the list.