How the surge in renewable energy investment is making it easier for companies to transition
In the last decade, the growth of renewable energy has surpassed all expectations. The speed at which the global energy transition is taking place has dramatically accelerated this past year. Although the advancement of renewable energy remains
a cornerstone on the path toward sustainability, it’s now also seen as a way to reduce the effects of geopolitical vulnerability and ensure affordability.
Going green: incentives
According to the World Economic Forum, clean energy investments are expected to top US$1.4tn in 2022. Growing at an average annual rate of 12% since 2020, they account for almost three-quarters of the growth in overall energy investments.
In seeking to reduce the risks associated with oil and gas dependency, governments in the US, LATAM and Europe are providing unprecedented forms of support to encourage more private investment into wind, solar, geothermal and hydropower energy, as well as assets relating to research and development for a variety of green technologies.
Leading towards greater market diversification, this clean energy push is ultimately a win for energy consumers, both large and small, who are looking for greater stability and lower costs.
Sustainability as a business strategy
Before this most recent wave of policy incentives in support of an energy transition, there was already a visible trend towards sustainable financing, which generally relates to green energy projects, but increasingly includes investments in companies that seek to improve environmental, social and governance (ESG) performance.
According to statistics from Boston Consulting Group, the vast majority – 75% – of investors claim to prioritize sustainability performance, and well over half – 60% – of business executives believe that sustainability matters to investors.
On the one hand, companies can incorporate sustainability measures along their supply chain to lead to cost savings and revenue growth. On the other hand, as it pertains to ESG criteria, sustainability must also be present throughout the value chain, since it speaks to a company’s commitment to good governance, tying into its core values, identity, and overall image.
The benefit of an ESG approach is precisely that it serves to reach profit-driven goals as well as impact-driven Key Performance Indicators (KPIs).
Going green: assurances
Although the application of ESG criteria is increasingly seen by investors as an indication of sustainable growth, there’s a definite need to develop better standards, frameworks, and measurement methods to properly determine sustainability profiles.
While industry players are working to establish these standardized parameters, they also have the option to buy into green bonds as a certified form of investment. When green bonds comply with standards such as the Green Bond Principles and Green Loan Principles, they act as a form of mutual assurance between bond issuer and investors, as both parties vouch for each other’s commitment to sustainability measures.
Atlas’ green finance framework
Atlas issued its first green bond in 2018, specifically to refinance two solar plants in Uruguay (El Naranjal and Del Litoral). Moody provided a rating of GB1, the highest score possible, during a green bond assessment.
To ensure full transparency, at Atlas, we developed our own Green Finance Framework as a way to clearly communicate the impact of our clean energy projects, in accordance with our commitment to an ESG approach.
Our Green Finance Framework includes both an allocation report and an impact report within the investor letter that’s made available on our website. These reports detail every green finance instrument issued by Atlas, in addition to providing examples of the green projects funded by those instruments. Importantly, unallocated proceeds are also outlined in the report.
The importance of transparency cannot be overlooked when greenwashing threatens the availability of capital for projects focused on implementing lasting environmental change by fostering a net-zero emissions economy from the ground up.
Since Atlas’ approach is to operate with complete transparency, we also obtained a second opinion from Sustainalytics to vouch for the credibility of our Green Finance Framework, which is also accessible through our website.
Meeting the momentum
The energy transition is being pushed not only by government policies, but also by consumer demand, and increasing regulations against carbon emissions. All these factors are leading companies to adopt cleaner production methods, at a much quicker pace than ever before.
In fact, projections indicate that renewables will generate 60% of the world’s electricity by 2035. If that’s the case, then companies should consider making the switch sooner rather than later. For starters, building a reputation as a company that values sustainability and ESG is a cumulative practice – meaning that the sooner you start, the more credibility you build.
In addition, while solar energy is known to be the most affordable option, this is still a resource that’s channeled through energy procurement contracts, which may be subjected to competitive bidding as more companies seek to tap into these energy sources from in-demand providers.
The benefits of working with Atlas
The benefits of working with established producers such as Atlas can be summed up in five points:
|1||Expanding Business||Atlas has the advantage of solid on-the-ground experience in numerous jurisdictions over many years, which means that our solar plant locations were chosen for their ability to provide maximum output, while younger producers may not have access to the most ideal places from which to operate. We have a varied pipeline of rigorously assessed projects, and we’re ready to build near industrial hubs in the markets where we have presence.|
|2||Quality of our projects||One of our most valuable assets, which allows us to continue growing on a national and international level, and with the continued support from our communities and governments. Thanks to the relationships we have built with providers and contractors, we have a 100% execution success rate across all of our contracted projects.|
|3||Strong operating models||Atlas Renewable Energy’s capital source and overall backing comes from Global Infrastructure Partners (GIP), a leading independent infrastructure fund manager with over US$84bn under management, with a robust renewable energy portfolio of over 19 GW of operating and construction capacity worldwide. With this backing, and our strong operating model of systems and processes, we can focus on innovation without sacrificing production and negotiate better value contracts with global suppliers we trust and known can deliver.|
|4||A dedicated workforce||Following extensive consultation with communities local to the sites where we operate, we have established technically-focused vocational education and training programs that create not just job opportunities during construction, but also a legacy of improved skills and employability in the local area. Within the company, we have developed a dynamic corporate culture that naturally creates the conditions to generate diversity, and from that point we have actively worked to create inclusivity, ensuring that fresh viewpoints and new perspectives are given the space to grow.|
|5||Regulatory credibility||Our compliance with green bond standards and the initiative to set up our own Green Finance Framework demonstrates our commitment to do well by doing good, protecting clients against risk and positioning Atlas as a trustworthy partner for companies and investors who are looking to join the energy transition.|
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