Labor Negotiations Continue, Renewables Share Prices Tumble, and More ESG News This Week

FactSet StreetAccount publishes regular company-level and summary-style ESG news. Below is our recap of key ESG headlines over the past week.

Chart of the Week: Mixed Renewables Shares Tumble, Led by NEP and Volatalia

Diversified renewables shares are weaker across North America and Europe this week as higher government bond yields continue to impact the broad utilities sector. Figure 1 shows share prices for bundle of US renewables firms. In July, the segment gave up year-to-date outperformance versus the broad utility sector and has underperformed since, in lockstep with the Treasury yield rise.

In the US, NextEra Energy Partners saw sharp losses (see Figure 2) after lowering distribution growth guidance. Firm cited higher financing costs and a desire to preserve equity. The move was followed by several analyst downgrades/price target revisions noting the need for infrastructure developers to rethink growth plans when cost of capital is high. Market also seeing potential read through to NextEra Energy earnings as firm will likely see fewer dropdowns to NEP. In Europe, Voltalia slid and saw analyst downgrade after reporting a wider H1 earnings loss revising guidance to lower end of prior range.

Figure 1: Diversified renewables share prices versus Treasury yields (inverted)

Source: FactSet, prices as of 11:30am ET

Figure 2: Recent price changes for select mixed renewables companies

Source: FactSet, prices as of 11:55am

Thematic Performance for the Week

Thematic sectors lower on the week: declines led by diversified renewables, transition materials, and hydrogen. Sunlight Financial, TPI Composites and NextEra Energy Partners among losers. Gainers included US EV start-ups Fisker (ramp up of Ocean eSUV deliveries) and Rivian. Elsewhere, US Dist. Judge Kacsmaryk declined to block a rule allowing ESG considerations in retirement funds.

Trade relations in focus this week as Europe seeks to protect its transition sectors from foreign competition. Tesla lagging US rivals following reports the EV maker is a target in EU's investigation into Chinese subsidies. Beijing and Brussels agreed to talks over the EV probe during EU trade chief's China trip this month. Meyer Burger and SMA Solar moving higher Thursday following reports the German government is weighing options to protect domestic solar manufacturers from an influx of cheap Chinese PV modules.

Australian lithium miners mostly lower amid softening lithium prices, retesting April lows. Allkem slid after reporting cost blowout of $641M across flagship projects driven by increased labor and material costs. Conversely, Lithium Power International up big today after confirming buyout talks with Chile's Codelco; company also reported narrower FY NPAT loss vs year-ago. Lake Resources turning positive following successful deployment of Lilac Technologies' direct extraction tech at its Kachi project, reportedly on track for DFS in December.

Environment

NYC Climate Week concluded with few commitments from nations, though Spain pledged €225M to the Green Climate Fund. Press takeaways highlighted increased fervor against fossil fuels at the UN Climate Ambition Summit, while China stated a complete fossil fuel phase out is unrealistic. Developing nations voiced concerns over struggling to finance net-zero path while ensuring critical energy supplies. Jefferies analysts noted increased concern on physical impacts and risks as investors use outdated climate models, as well as the exponential growth of renewable energy.

The IEA warned fossil fuel usage must fall by 25% by 2030 and global renewable energy investments of $4.5T a year are necessary to limit global warming. Report also noted solar and renewable energy growth is leading to progress in reducing global warming. In the US, the White House to define zero-emission building standards Thursday. In a non-legally binding directive, the Biden administration charged agencies to account for climate change in budgets.

In Europe, EU ministers agreed to weaken a previous EC proposal for vehicle emission requirements. The EU adopted measures to prohibit intentionally added microplastics into products. In France, President Macron unveiled the country’s “ecological plan” to reduce CO₂ emissions, with plans of 10GW offshore wind power and doubling of solar power and biogas production. Despite opposition, Equinor’s North Sea Rosebank oil field received UK approval. Portuguese youths sued 32 European countries over climate change inaction.

Social & Governance

The UAW could further expand strikes against Ford, GM, and Stellantis on Friday if no significant progress made in negotiations. In Hollywood, the Writers Guild voted to end strike and will soon vote to ratify a labor agreement. Actors continues to strike; negotiations expected to resume 2-Oct. Video game voice and motion capture performers authorized a strike if labor talks fail. In Las Vegas, the Culinary Workers Union voted to authorize potential strikes after labor contracts with MGM Resorts, Caesars and Wynn Resorts expired 15-Sept.

The US FTC and 17 states filed a widely expected antitrust lawsuit against Amazon, alleging its retail practices are anticompetitive. UK's CMA said a restructured deal "opens the door" to Microsoft's $75B acquisition of Activision. Tyson Foods and Perdue Farms face Dept. of Labor investigations into reports of migrant child labor in slaughterhouses. JPMorgan paid $75M to settle claims over bank’s ties to Jeffrey Epstein and reached a confidential settlement with former private banking chief Jes Staley.

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