Key points
- Green energy and ethical investing are getting a lot more investor attention
- Australian Ethical is benefiting from the shift of investor capital to more ethical businesses
- Fortescue Future Industries (FFI) is building a large portfolio of green energy and decarbonisation projects around the world
There is a small but growing number of ASX shares that are benefiting from the growth of green energy and others that are being helped by the rise of ethical investing.
Investment themes may not always pan out the way that investors are thinking. Specific companies may not benefit in the expected way. But, keeping that in mind, these two ASX shares are planning to take advantage of that growth in interest and changing global views:
Australian Ethical Investments Limited (ASX: AEF)
Australian Ethical describes itself as Australia's leading ethical investment manager. It aims to provide investors with investment products that align with their values and achieve competitive returns.
The company is experiencing positive momentum as more global capital and investment funds look to tackle climate change. Australian Ethical says that an essential part of the decarbonisation process is shifting capital flows.
This ASX share is building its capability when it comes to its investment, sales and customer service teams. It's also enhancing its product development and technology platforms. Australian Ethical is investing in growing its brand and increasing its reach in intermediated channels.
Funds under management (FUM) growth continues for the business. In the three months to 31 December 2021, FUM increased 6% to $6.94 billion. Over the half-year to December 2021, FUM rose from $6.07 billion to $6.94 billion. Half-year underlying net profit after tax is expected to be between $5 million to $5.5 million (with a mid-point increase of around 8%).
It also recently bought a minority stake of impact investment business Sentient Impact for $5.2 million.
Fortescue Metals Group Limited (ASX: FMG)
Fortescue is best-known for being one of Australia's largest iron ore miners.
However, it also has a young but quickly growing green division called Fortescue Future Industries (FFI). This division is aiming to take a global leadership position in green energy and green technology with a vision to make green hydrogen the most globally traded seaborne commodity in the world.
It's not just focused on one country or just one type of green energy. One of the first major developments is (global) green energy manufacturing centres, with the first being built in Gladstone, Queensland. The first stage of centre is an electrolyser manufacturing facility with an initial capacity of two gigawatts per annum and an investment of up to US$83 million.
The ASX share has also announced a memorandum of understanding with UK-based construction company JCB and Ryze Hydrogen for the purchase of 10% of FFI's global green hydrogen production.
It has entered an agreement with AGL Energy Ltd (ASX: AGL) to undertake a feasibility study to repurpose infrastructure at the Hunter Valley Liddell and Bayswater coal-fired power stations to generate green hydrogen from water, using renewable energy.
Fortescue also recently announced the acquisition of Williams Advanced Engineering (WAE) for US$223 million so that it can provide critical technology and expertise in high-performance battery systems and electrification.
