As investors try to reposition their portfolios for the new year, many can look to socially responsible exchange traded funds.
Anna Paglia, head of ETFs and indexed strategies at Invesco, argues that the combination of supportive policy changes under a more green friendly Biden administration and technological advancements should continue to fuel the clean energy investment theme, CNBC reports.
“Think about solar panels today that cost 80% less than they used to,” Paglia told CNBC. “This is where the growth of an industry’s going to come from.”
Jay Jacobs, head of research and strategy at Global X ETFs, also believes that businesses, consumers, and regulators will be key to that growth.
“You do have Biden with a Democrat Senate behind him, which keeps him very focused on a $2 trillion infrastructure plan, which is inclusive of clean tech as well,” Jacobs told CNBC. “On the consumer side of things, you see more and more people installing solar panels, buying electric vehicles. Electric vehicle sales were up 70% in China this year alone. And if you look at the business environment, you’re seeing that a lot of what’s happening with ESG is not just about investing, it’s about changing how companies operate.”
Jacobs pointed to the increased awareness among corporate America, which has only contributed to clean energy’s overall growth.
Companies are “thinking about themselves as members of society. How do they impact the environment? How do they impact their customers? How do they impact their employees?” Jacobs added. “When you have this rise of interest in something like climate change or various social issues, you see companies really putting dollars behind that as well. So, I think it’s not just a regulatory change. I think it’s the confluence of multiple different stakeholders that are pushing clean tech forward right now.”
Looking ahead, regulators could also lay out guidelines to help investors better invest in the green industry.
“The SEC is really focused on disclosure, truth in advertisement. It is not enough to say that you are ESG, especially when E, S and G mean so many different things for so many different sponsors,” Paglia said. “We want to make sure that companies that portray themselves to be ESG compliant somehow show what it means for them and disclose that.”
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