Investors in tech companies may think CEOs are focused on inventing the “next big thing” that will turn out amazing profits. That used to be true. But now, many of the biggest tech companies are more focused on getting their stocks in ESG funds.
Rather than focus on innovating new technologies, they’re spending loads of investor dollars building renewable energy projects to offset emissions in the hopes of building their reputation with woke ESG fund managers.
Meanwhile, investors get charged higher fees by the fund managers. So the investor is losing money both ways.
Here’s what the big tech companies are focused on according to Sam Schechner in The Wall Street Journal:
Big tech companies say they have built up in-house teams staffed with former deal makers at electrical utilities who can source deals directly with providers, often sidestepping an industry of middlemen and brokers that generally handle power deals. Firms such as Amazon often blanket a country where they have operations with requests for energy projects, according to developers.
“We’ll say, hey, we want to go look at every potential project that could be in development in a country,” Mr. Sahlstrom of Amazon said of his team that seeks out power-purchase agreements, or PPAs.
Developers of wind- and solar-energy projects say demand from big tech has encouraged a rise in demand for PPAs from other corporate buyers. Because the projects require heavy upfront investment that takes years to recoup, banks often won’t finance them—or will give less favorable terms—unless the projects have an anchor purchaser promising to buy most or all of the production, according to developers and energy financiers.
In Spain, where Amazon has committed to buying power from five solar plants, developers say multiple big tech companies are looking for new deals.
“We’re talking to all of them,” Martin Scharrer, who leads such negotiations for the renewable-energy producer Encavis AG ECV +1.70% , said of the tech companies. Mr. Scharrer previously struck a deal with Amazon to sell energy from a solar plant outside Seville, Spain.
Facebook said that it reached its goal of buying enough renewable energy to cover its global operations, including data centers, last year but that it is continuing to strike new power deals because its energy use is growing. Facebook’s electricity use rose 39% in 2020, according to its annual sustainability report. “It’s showing that voluntary targets are really moving the market,” said Urvi Parekh, director of renewable energy at Facebook.
Microsoft said it has power-purchase deals that it hasn’t yet announced that will catapult it to near the top of the world’s biggest green-energy buyers. Mr. Janous said his company focuses on shared environmental goals rather than rankings, but added: “We know what the rankings are and, trust me, my boss knows what the rankings are, and any time there’s a new one that comes out, I hear about it.”
Action Line: Not one word from these companies about how renewable energy creates shareholder value. It’s just another way you invest, and they win.
P.S. Fire! Run for the exits! Another big bank has entered the carbon credit markets. I bet this is more about EGO than saving trees. It’s a perfect Wall Street creation: offer a way for the elite to offset their private jet wash by scrubbing it clean with carbon credits. Read more here.
P.P.S. Your Survival Guy’s on the pulp, I mean pulse. You know about the bubble that’s popped in lumber prices. That’s old news. It’s the same old story that goes like this: Government creates an incentive to grow trees on depleted farms in the south and boom, trees everywhere. The financial crisis hits, demand plummets, sawmills are shuttered. Then Covid, boom again, but not enough finished lumber. Prices go up, big owners of finished wood sell into the market, bubble deflates. Rinse and repeat. Read more here.