Engaging for a greener future - Newton Investment Management

Why engagement is an effective way to support the energy sector’s transition to a lower-carbon future.

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Why engagement is effective?

  • Newton believe that, rather than shun them, it is important to engage with companies in the energy sector to help support and encourage a successful energy transition to renewables.
  • Their view is that traditional active managers can embed engagement opportunities into their due diligence analysis of stocks before purchase, bringing a number of benefits over passive managers.
  • Investors are increasingly voting against management. They expect this surge of investor activism to grow as we emerge from our current Covid-19 environment.
  • There are strong expectations that US President Joe Biden will allow a global consensus to form on climate management, hence accelerating the low-carbon energy transition.

Though they have been seeing hints of a rotation back into value stocks over recent weeks, which could benefit oil and gas companies in the short term, these tactical moves believe long-term concerns about the sustainability of the energy industry as it exists today.

The systemic risk surrounding climate change and energy companies also underscores the difference in approach between active managers and universal owners – such as passive managers and large retirement funds – and the tools active managers have at their disposal to make persuasive cases for change.

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