ESG Portfolio Spotlight:
Fourth Quarter 2020

ESG Portfolio Spotlight: <br/>Fourth Quarter 2020

Westmount’s Environmental, Social and Governance (ESG) Portfolio allocates clients across a diverse selection of investment managers that directly support innovative companies driving positive social change. Westmount’s ESG managers are aligned with the United Nations Sustainable Development Goals, a globally recognized framework adopted by the U.N. General Assembly to collaboratively tackle humanity’s most pressing issues.

Portfolio Spotlight: Ecofin Global Renewables Infrastructure Fund

The Ecofin Global Renewables Infrastructure Fund invests primarily in low-carbon, electricity-generating companies; zero-emission renewables developers; and grid operators providing a measurable decarbonization impact. The Fund provides investors access to the fast-growing decarbonization theme, with electricity taking a substantial share from other energy sources as well as accelerating the transition to cleaner electricity generation.

Below are a few examples of community projects that have been enabled by funds provided through Ecofin:

Powering Japan's Sustainable Future

In 2019, Japan was the world's fourth largest oil consumer and sixth largest coal consumer, with non-fossil fuels accounting for only 10% of total power usage.1,2 Japan's reliance on traditional energy sources has caused the country to lag behind many other developed countries with respect to the utilization of renewable energy. Consequently, this imbalance has provided a rich opportunity set for innovative technology companies looking to establish a foothold in the clean energy space. One such company, Renova, works directly with local communities to provide clean and efficient energy across the country.

Throughout their continued expansion, Renova has prioritized the needs and values of community members to ensure their projects are both beneficial and minimally disruptive. For example, prior to construction of a new power plant in Yokkaichi Prefecture, Renova conducted across-the-board environmental impact assessments and partnered with community members to create a specialized habitat designed to protect rare species living near the project.

In the community surrounding their Nasukarasuyama solar project, Renova worked with local rice farmers to ensure their plant would not interfere with the water supply there. Renova has also worked with community members near their Karumai plant to construct a mountain lookout that now serves as a popular destination for tourists.

Renova's community-oriented approach has enabled them to install numerous sustainable power plants throughout Japan. Last year, Renova's projects produced enough energy to power roughly 500,000 households, resulting in an annual carbon dioxide reduction equal to the planting of roughly 88 million cedar trees.3 As an Ecofin portfolio company, Renova plans to increase their clean energy production capacity significantly as more clean energy plants—including geothermal, biological and wind projects—come online in the next few years.

From Old Electronics to New Energy Sources

electronic waste

U.S. cities sent more than 146 million pounds of waste to landfills in 2018.4 Already a significant source of carbon emissions, landfills are also the United States' third leading emitter of methane, a greenhouse gas 84 times more potent than CO2.5 Even more concerning is the relatively high concentration of toxic metals like lead, mercury and cadmium, which can leech into the surrounding soil and groundwater, contaminate crops and threaten local food supply chains.

One of the leading innovators in the effort to reduce landfill waste also happens to be one of Ecofin's largest portfolio holdings. Last year, Covanta diverted 21.6 million tons of waste from landfills toward clean energy production, enough to continuously power one million homes or fill a 6-lane highway with garbage trucks spanning from New York to Los Angeles. Covanta's waste-to-energy facilities recycle 550,000 pounds of metal annually.6

In addition, Covanta's ECOvanta business line seeks to reduce the amount of electronic waste that ends up in landfills. Under the program, discarded devices are collected, sorted, and broken down into their component parts. The raw materials are then returned to electronics manufacturers to be recycled into new devices. More than 15 million pounds of electronic waste is recycled each year.7

Empowering Economic Development in Indigenous Communities

Innergex is a leading independent renewable power producer in the western hemisphere, currently operating 75 facilities and powering more than 850,000 households across the United States, Canada, France and Chile. While environmental sustainability has historically played a key role in their business model, Innergex also emphasizes the importance of fostering productive relationships with the Indigenous communities in which their projects are based.

At many of their completed and developing sites, Innergex works in tandem with Indigenous leaders and communities to proactively identify and mitigate potential harmful impacts of Innergex projects on local ecosystems. Beyond power generation, Innergex also frequently takes steps to further support sustainable economic development in these communities.

For example, in 2019, Innergex split ownership of their Innavik hydroelectric project with the Inuit community of Inukjuak in Northern Quebec. Revenues from the facility will help the local community become self-sustaining and eliminate its reliance on diesel fuel to generate power. A portion of revenues will also be re-invested directly into the community to promote education, heritage programs, social events, and funding opportunities for local entrepreneurs.

Innergex has established similar partnerships at their Kwoiek Creek project in British Columbia, and with the Mi'gmaq in Quebec at Innergex's Mesgi'g Ugju's'n Wind Project.

Have questions about our ESG offering or investment platform? Call us at 310-556-2502 or email info@westmount.com to speak with an advisor today.

Sources

  • Enerdata Global Energy Statistical Yearbook, “Coal and Lignite Domestic Consumption, 2020.” https://yearbook.enerdata.net/coal-lignite/coal-world-consumption-data.html
  • U.S. Energy Information Administration, “Japan,” Nov. 2, 2020. https://www.eia.gov/international/analysis/country/JPN
  • Renova Japan, “The Facts About Renova.” https://www.renovainc.com/en/recruit/about/number/
  • Environmental Protection Agency, “National Overview: Facts and Figures on Materials, Wastes and Recycling,” March 2020. https://www.epa.gov/facts-and-figures-about-materials-waste-and-recycling/national-overview-facts-and-figures-materials
  • Environmental Defense Fund, “Methane: The Other Important Greenhouse Gas.” https://www.edf.org/climate/methane-other-important-greenhouse-gas
  • Covanta: https://www.covanta.com/what-we-do/waste-to-energy
  • Covanta: https://www.covanta.com/how-we-can-help/solutions/electronic-waste-recycling


Disclosures

This report was prepared by Westmount Asset Management, LLC (“WAM”). WAM is registered as an investment advisor with the U.S. Securities and Exchange Commission. The information contained in this report was prepared using sources that WAM believes are reliable, but WAM does not guarantee its accuracy. The information reflects subjective judgments, assumptions and WAM’s opinion on the date made and may change without notice. WAM undertakes no obligation to update this information. It is for information purposes only and should not be used or construed as investment, legal or tax advice, nor as an offer to sell or a solicitation of an offer to buy any security. No part of this report may be copied in any form, by any means, or redistributed, published, circulated or commercially exploited in any manner without WAM’s prior written consent. If you have any comments or questions about this report, please contact us at info@westmount.com.