Companies that invest in energy transition can improve their financing conditions and increase their attractiveness in the capital market. However, more recently, this effect only materializes when the initiatives result in concrete economic gains.
The assessment comes from economist José Augusto Ruas, president of IPEES (Institute for Research and Economic and Social Studies) and professor of Economics at FACAMP (Faculdades de Campinas), in an interview with... Canal Solar.
According to him, cost reduction and greater operational predictability are crucial factors in increasing company valuations. For the expert, after intense growth in the availability of resources for ESG at the beginning of the decade, the current market has become more cautious and no longer prices only environmental practices themselves, but the more tangible impact they have on the current and future results of companies.
In other words, initiatives related to the energy transition, by themselves, are not enough to boost market value if they are not accompanied by a consistent strategy for implementation and results generation.
“What the market values is the prospect of results. Sustainability practices can contribute to this, especially when they generate immediate cost savings or prepare the company for future environmental requirements,” he says.
The economist also points out that the relevance of energy efficiency depends on the cost structure and the intensity of technological progress associated with investments in each segment. Energy-intensive sectors, such as mining, steelmaking, pulp and paper, and data centers, tend to benefit more directly from these initiatives.
“When we analyze the correlation between energy sustainability indicators, market value, or financing capacity, it is not possible to compare companies from different sectors, because the importance of energy in operating costs varies greatly,” explains Ruas.
"Furthermore, factors such as environmental history, regulation, global political trends, and market conditions also influence investors' perceptions," the professor points out.
ESG has lost momentum, but not relevance.
Ruas points out that, between 2020 and 2022, ESG (Environmental, Social and Governance) criteria, which assess sustainable business practices in addition to financial returns, gained significant weight in investment decisions, driven mainly by large international funds.
He points out that this movement favored companies with more advanced environmental policies and even generated financial euphoria in carbon credit markets. However, from 2024 onwards, the importance of these criteria decreased.
“Part of the market realized that many initiatives were more reputational than economic in nature. Large global investment funds abandoned ESG pricing practices and, in general, investors returned to prioritizing concrete financial results,” he highlighted.
Despite this context, the economist believes that the link between sustainability and stock appreciation has not disappeared; it has simply become more restricted to projects capable of generating measurable economic returns.
“Today, there is less enthusiasm for generic environmental indicators, but initiatives that demonstrate financial gains continue to be valued (…) When a company manages to clearly reduce costs through technology and energy management, this improves margins and predictability, which can be reflected in market valuation,” concludes Ruas.
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