Fondita's newest portfolio manager Marcus Björkstén has a clear sustainability focus and therefore prefers to invest in companies that are strong sustainability players. In the text below, Marcus highlights a company that, according to him, is a great example of a sustainable company.
A company that meets the sustainability measure!
A company we have chosen to invest in is the Austrian energy company Verbund. The holding is a good example of our investment philosophy with a focus on sustainability. Verbund is Austria's leading energy company and one of Europe's largest producers of electricity through hydropower. The company also operates a number of wind farms in Germany. This means that electricity is produced at a very competitive cost and in addition, the electricity produced by the company is 100% green. Verbund is well positioned and have strong ambitions to reduce CO2 emissions and to increase the efficient use of natural resources. The company also benefits from the measures that authorities at EU level have taken to reach the climate targets.
In order for the EU to achieve its set targets for CO2 emissions, it must be made unattractive to produce electricity using fossil fuels and make it attractive to increase the share of renewable energy. This is controlled by tightening the number of emission rights, which in turn drives up the price of electricity. The winners here are of course the energy companies that are not burdened by emission rights and the cost for the company the rights entail. In addition, consumers are willing to pay a premium for electricity that is produced in a sustainable way. From a long-term perspective, we believe that Verbund will be very well positioned in the next upcoming 10-15 years.
Verbund also has another leg to stand on, because they own the largest electricity distribution network in Austria, which is a stable and profitable business. The Austrian state owns 51% of the company, which is not surprising given the company's operations and how strategically important they are for the country. The Verbund share has had a very positive development over the past 12 months when it rose by 86%. Since the beginning of the year, the share has risen by about 20%.
We are convinced that companies that have positioned themselves properly in terms of the fight against climate change will be more successful than others. The companies that have chosen to continue as before have a though way to go and sooner or later they will be forced to change, which is likely to be very time-consuming and costly.