Stocks experiencing a resurgence due to the recent developments.
Interest in green and sustainable stocks is expected to increase in 2025 due to a combination of falling interest rates, renewed investor interest, and strong performance evidence for ESG (environmental, social, governance) and clean energy sectors.
Several factors support this outlook. Performance resilience and outperformance have been evident in ESG stocks, with clean energy stocks notably outperforming fossil fuels and traditional energy sectors despite some political headwinds. Renewed investor flows, particularly in Asia, have been resilient, supported by policy incentives and rising retail demand for ESG investments.
Lower interest rates increase the attractiveness of longer-term growth sectors like renewable energy and green technologies. The cost of capital decreases, which often benefits companies funding clean energy and sustainability projects. Additionally, increased green bond issuance, especially certified bonds, has been shown to lead to positive stock market reactions and improved environmental performance for issuers.
Global policy and investment trends also play a significant role. Europe and China are accelerating commitments and investments in clean energy and green infrastructure, pledging nearly USD 800 billion combined for low-emissions technologies by 2030. Although US investment has stalled, Europe and China’s momentum is strong.
Several companies are poised to benefit from this trend. Schneider Electric, a potential beneficiary of the green success wave, achieved very solid sales in the third quarter, according to analyst Andre Kukhnin. The annual targets for Schneider Electric remain unchanged. Nordex, another company in the green sector, is well positioned, particularly in Europe, according to analyst John Kim.
The Green Future Index, developed by Börsenmedien AG, includes Nordex and Schneider Electric. Börsenmedien AG holds the rights to the index and has concluded a cooperation agreement with the issuer of the displayed securities, under which it grants the issuer a license to use the index.
Experts predict a potential increase in investment in green stocks this year. Swiss bank UBS raised the price target for Schneider Electric from 260 to 270 euros. Deutsche Bank Research raised the price target for wind turbine manufacturer Nordex from 17 to 18 euros and recommends buying.
Many experts, including Gunter Greiner from the WIWIN Green Impact Fund, predict a rising development for sustainable stocks in 2023. Gunter Greiner named falling interest rates as a condition for an upturn in sustainable stocks in March.
In summary, sustainable and green stocks are well positioned to benefit from this year’s economic conditions and global investment trends, with certified green bond issuers and key renewable energy companies as prime beneficiaries. However, regional differences and political challenges—especially in the US market—could moderate growth in certain areas.
[1] Source: BloombergNEF [2] Source: MSCI [3] Source: Yahoo Finance [5] Source: International Energy Agency (IEA)
- With the rise in interest for ESG (environmental, social, governance) and clean energy stocks, it seems plausible that there will be increased investment in real-estate and finance sectors that prioritize sustainability, considering Schneider Electric's solid sales and the raising price targets for both Schneider Electric and Nordex, as predicted by experts like Gunter Greiner.
- As the stock market reacts positively to green bond issuance and global policies support investments in renewable energy, there's a high potential for investors to find appealing opportunities in the stock-market, particularly in companies like Nordex and Schneider Electric, which are poised to gain from the growth of the green sector.
