Written by: George Prior
Elon Musk’s calls for increasing oil and gas output in the wake of the Ukraine invasion will not deter investors from positioning their portfolios towards renewable energy.
The observation from Nigel Green, chief executive and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations, comes as the Tesla boss says he supports increasing U.S. oil and gas output despite the “negative” impact it would have on his company.
“Hate to say it, but we need to increase oil & gas output immediately,” Musk posted to his more than 76 million followers on Twitter Friday night. “Extraordinary times demand extraordinary measures,” Musk added while the invasion of Ukraine by Russia has led to a surge in oil prices.
Nigel Green says: “Elon Musk is right - for the moment at least – to respond to the immediate crisis unfolding due to Russia’s invasion of Ukraine, and the fallout from it, we need to do everything we can, which includes increasing oil and gas production.
“This is because the investment to date in renewables has not been sufficient to react at scale when something of this magnitude happens. It shows how we should have gone harder and faster on green energy before now.”
He continues: “The Ukraine-Russia situation is helping to drive oil and gas prices around the world, but investors who have properly diversified portfolios should not suddenly move away from sustainable alternatives.
“The case for green energy being an investment megatrend of the decade has not changed; The fundamentals remain the same.
“Indeed, despite Musk’s comments, the trend is set to gain further momentum for several reasons.
“First, governments and regulators are becoming increasingly pro-ESG which boosts investor confidence. Second, as millennials, who are statistically more likely to seek responsible investment options, become the major beneficiaries of the largest intergenerational transfer of wealth – an estimated $30tn in the next few years – we can expect both retail and institutional investors to continue to pile into ESG. And third, the pandemic has focused minds on the fact that the health of our planet directly affects human health which, in turn, affects the way we all live and work.”
As sustainable investments move from a ‘quirk' or ‘nice to have' to a legitimate portfolio diversification tool that delivers profits with purpose, deVere last year announced it is to offer free, independent advice to clients on socially responsible investing, with the aim of positioning $5bn in environmental, social and governance investments within five years.
In addition, deVere also became a founding signatory of The Financial Alliance for Net Zero, the UN group for financial institutions to make credible net zero commitments through the UN’s Race to Zero project.
Nigel Green concludes: “Elon Musk is correct and calls for increasing oil and gas output is a sensible response for the short term, but sustainability as an investment megatrend of the decade is not going to be compromised.
“As ever, investors need to ensure now more than ever that their portfolio is properly diversified to best-position themselves to sidestep risks and seize the opportunities.
“Musk says we’re in ‘extraordinary’ times – he is right - but these do not last forever – as financial history teaches us, and investors need to think carefully before rushing to reposition portfolios away from future-focused alternatives.
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