Utility Companies Face Challenges in an Evolving Energy Landscape

Electric and gas utilities face a complex energy landscape characterized by structural changes and impending growth. Greenhouse gas regulation, decarbonization objectives, changes in commodity prices, and shifting public perceptions have put the sector’s traditional business model at risk despite growing global energy and electricity demand. Utilities must now find a way to continue to reliably produce and distribute energy while simultaneously lowering their carbon footprint.

Highlights

  • The main determinant of a utility company’s sustainability profile, including its environmental and social impacts, is the mix of energy sources it uses to generate electricity.
  • Fossil fuel electricity generation can be replaced by cleaner energy sources without modifying a utility company’s transmission and distribution infrastructure or its business model.
  • As the energy sector evolves, utilities must evolve too.

Resources

Investing involves risk, including the risk of loss. Sustainable investing focuses on investments in companies that relate to certain sustainable development themes and demonstrate adherence to environmental, social and governance (ESG) practices; therefore the universe of investments may be limited and investors may not be able to take advantage of the same opportunities or market trends as investors that do not use such criteria. This could have a negative impact on an investor’s overall performance depending on whether such investments are in or out of favor.

This material is provided for informational purposes only and should not be construed as investment advice.

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