Midstream energy has been making surprising strides on the ESG front. Alerian reported in the summer that the constituents of the Alerian Midstream Energy Select Index had been making progress on implementing ESG protocols into their work.
MLPs will play a huge role in hitting net zero emissions by 2050, with carbon capture and hydrogen technologies each contributing to the push. Hydrogen is a clean tech that can take advantage of infrastructure that the midstream already has in place. Adding hydrogen to the mix and cutting back on methane can have up a substantial impact on cutting CO2 emissions. Carbon capture, meanwhile, will be essential. Without CCUS technology, the IEA sees achieving decarbonization by 2050 as practically impossible.
Many companies have also made ESG reporting a priority as they work to achieve environmental goals, with some companies, such as Enbridge Inc., tethering executive compensation to ESG goals.
The ‘E’ in ‘ESG’ often gets the most attention, especially as the effects of climate change become clearer by the day, but ‘S’ and ‘G’ are also important. In terms of social responsibility, midstream companies played a key role in sustaining economies as COVID-19 restrictions lifted. Petroleum and natural gas currently account for the vast majority of energy (78%) consumed by the U.S. in 2020.
Following the creation of a $2 million charitable fund for employee volunteerism, David Slater, president and CEO of DT Midstream, said, “We’ve got the energy to achieve great things in communities where we live and work.”
For exposure to the master limited partnerships and midstream energy space, investors can look to related ETF strategies, such as the ALPS Alerian MLP ETF (AMLP ), the JPMorgan Alerian MLP Index ETN (AMJ ), the Alerian Energy Infrastructure ETF (ENFR ), and the ETRACS Alerian Midstream Energy Index ETN (AMNA ). Other funds with exposure to the midstream include the VanEck Vectors Energy Income ETF (EINC ) and the Global X MLP ETF (MLPA ).
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