Clean energy specialist Longspur Capital and corporate adviser Radnor Capital Partners have partnered to develop the Active Net Zero Clean Energy Universe of European clean energy companies that are actively enabling the transition to a net zero carbon world.
The ‘Active Net ZeroTM’ methodology has been pioneered by Longspur and Radnor to evaluate companies based on their actual performance towards the energy transition in a systematic, transparent and repeatable framework.
The need for a deeper, more stringent, methodological review of the inclusion criteria for the clean energy sector is to avoid so-called ‘greenwashing’ which results in Net Zero ‘laggards’ – companies that may have made Net Zero promises, but have yet to deliver material ‘green’ revenues or capex commitments – being included in mainstream, ostensibly ‘clean’ energy indices.
The Active Net Zero Clean Energy Index [ANZNRG Index] represents the top 50 European clean energy and related companies that meet these stringent criteria, and then adjusted for market capitalisation and liquidity.
Adam Forsyth, Head of Research at Longspur Capital, says: “We were looking to create a universe and index that was not just reliant on negative screening, and ‘clean’ or ‘green’ labels. We wanted to create a systematic methodology that reflects a company’s active engagement and progress in pursuing a net zero outcome.”
Iain Daly, Director and Co-founder at Radnor Capital Partners, added: “This index has been designed with authenticity at its heart. Investors are eager and willing to invest in the companies building a more sustainable future, but the means to do this are not immediately clear. This index identifies those companies helping the world reach net zero, rewarding genuine contribution not vague or unrealistic promises.”
Henry Cobbe, Head of Research at Elston Consulting, adds: “This has been an interesting challenge. Clean Energy has proven a popular asset class, but until recently the exposure has been rather concentrated that was a contributor in part to heightened volatility that made it harder for inclusion within portfolios.
“This new index is different in there ways: firstly the Longspur Radnor Active Net Zero methodology uses “positive screening” to focus on companies that are actively working towards energy transition; secondly it has a European focus that’s more relevant for UK/European investors; and finally it is constructed with liquidity criteria and single security size constraints to make it deliberately less concentrated. This helps reduce volatility relative to other Clean Energy indices and makes it more readily investable. We are delighted to be administering this innovative index and expect interest from index fund and ETF providers alike.”
