Despite the COVID-19 pandemic, renewable capacity in 2020 expanded by 260GW, an increase of more than 45 per cent from 2019, writes index provider Solactive.
Looming renewable energy policy deadlines are likely to push this growth even further. Motivation amongst investors to join the trend for thematic investment strategies remains high.
As one of the key players in the field of thematic investing, Global X ETFs is releasing two new ETFs at the same time that track companies advancing solar and wind energy technologies expected to fight against global warming. The two ETFs are the Global X Solar ETF (RAYS), and the Global X Wind Energy ETF (WNDY). Both ETFs track underlying Solactive indices and started trading at Nasdaq on 9th of September, 2021.
Solactive writes that the Sun is at the centre of the Solar System, radiating energy as a result of nuclear fusion. Solar energy is highly efficient and the most important energy source for life on Earth. According to the International Energy Agency’s forecast, around 145GW of new Photo Voltaic expansion is expected in 2021, reaching a total of 270 GW. The Solactive Solar Index tracks the 50 most relevant companies in the solar energy business. Only companies with at least 50 per cent of their revenues in the following segments are eligible for the inclusion: Solar Energy Materials, Solar Energy Systems & Components, Solar Power Production, Solar Technology, and Solar Power Installation, Integration & Maintenance. An exclusion approach based on UN Global Compact principles will be applied after the screening.
The wind industry has likewise witnessed impressive growth in recent years, Solactive writes. The Biden administration of the United States has set a 2030 plan for offshore wind energy infrastructure, which will push the demand of supplies to a new level. The global wind energy market was valued at USD62.1 billion in 2019, and it is estimated that by 2027 the industry will be expanding at a growth rate of 9.3 per cent each year. The Solactive Wind Energy Index tracks the top 25 pure-play wind energy companies which have at least 50 per cent of their revenues from wind energy activities including: Wind Energy Systems, Wind Power Production, Wind Energy Technology, Wind Power Integration & Maintenance. An exclusion approach based on UN Global Compact principles will be applied after the screening.
All indices derive their constituents via Solactive’s proprietary natural language processing algorithm ARTIS. Solactive writes that ARTIS is utilising advanced algorithms to parse high volumes of public documents evaluating companies’ exposure to various themes or topics. The sophisticated procedure not only detects potential index constituents considering a firm’s exposure to a theme but also ranks its importance to the very subject or industry. In addition, both indices feature an ESG screening for compliance with UN Global Compact principles provided by the ESG provider Minerva Analytics Ltd.
Timo Pfeiffer, Chief Markets Officer at Solactive, says: “With energy on the rise, we are pleased to support combating climate change and Global X is leading the trend.”
Sarah Wilson, CEO of Minerva Analytics, says: “As more investors consider how to embed the Sustainable Development Goals and Net Zero ambitions in their investment strategy, we congratulate Global X for showing how these funds can help make a positive contribution to SDGs 7 and 13, clean energy and climate change action.”