Global Decarbonisation Monthly Report | January

19 January 2022

2021 As the Revenge of the Old (High Emission) Economy

In 2021 the stocks in our universe traded mixed in what was undoubtedly the year of S&P 500. [1] Besides the strong performance of the FAANG group (FB up 26.07%, AAPL up 34.2%, NFLX up 13.2%, GOOG up 66.68%, and also MSFT up 52.56%) that are top constituents of the S&P500 by market cap, it is also striking that 7 of the top 20 highest returns of their broad index were legacy high CO2e emission names, namely Devon Energy, Marathon Oil, Ford, Diamondback Energy, Apache, Conoco Phillips and EOG Resources (DVN up 176.22% was the highest performance in the whole S&P, followed by MRO up 145.13%, F was the 5th highest performance up 132.88%). As expected, the energy transition is being characterised by supply reduction of fossil fuel commodities faster than demand decline, and capital chasing value opportunities poured into oil & gas names. Systematic risk abounded and explained, as we will see, part of the negative monthly performances. Idiosyncratic risks for certain decarbonization solutions and inflation fears combined with tapering and 2022 interest rate increases have hurt growth names in our universe. In policy terms, expectations on Biden’s Infrastructure Bill and COP26 outcomes boosted climate change solutions – lifting both Indices from first week of October to mid-November. The Bill was signed on November 15th and events in Glasgow ended on Nov 12th, which coincided with the beginning of a sell off for many companies in our universe. [2] The struggles of the accompanying Build Back Better Act were additional reason for the negative sentiment towards many names in our universe at year end. [3]


Green Growth & Brown Value Coexistence

In the table below, we see that systemic risks related to inflation, tapering and future interest rates hikes affected both growth and value in some months, but the year was marked by a persistent rotation towards value. The iClima Distributed Renewable Energy Index TR closed the year up 18.35%, after peaking on November 12th at a YTD return of 41.22%. The broader iClima Decarbonization Enablers Index TR closed 2021 up 7.6%, after peaking on November 8th at YTD of 17.3%. The most extreme month was October, when the index for CLMA was up 9.14% and DGEN up 15.88%. We expect the green/brown coexistence to persist in 2022.

Please note that all performance figures are showing net data. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product.

Looking back, we can identify some clear trends. An overwhelming conclusion is that many of the companies in our universe benefited from an incredible rally in 2020 and suffered a correction in 2021. The market reaction in 2021 started with a rotation to value as early as February, as growth names naturally are affected by interest rate increase expectations. As we will see, profit taking was not due to lack of revenue growth reporting, lack of supportive climate change policies or slowdown in adoption.

Please note that all performance figures are showing net data.


2021 Trends & 2022 Opportunities

Traditional portfolio managers are predicting that 2022 will not be the year of “story stocks”, therefore prescribing the conventional idea of playing defence with banks and utilities, and finding value in companies like Ford or GM. Such strategy is also predicated on a “story” - that Ford will successfully migrate into EVs, that energy names do not face incredible risks with the energy transition and that cash flow generated by incumbent players are stable and certain. A beginning of the year resolution on the on-again/off-again Build Back Better plan could trigger a rotation back towards many constituents in CLMA. Senator Manchin has just indicated that “the climate thing is one we probably can come to an agreement on much easier than anything else”. [4] Here are some of the 2021 trends, some segments faced material stock price correction while announcing solid product growth and further revenue prospects while some segments benefited from another year of sound share performance:

Some interesting trends in particular subsegments were as follows:

1. Certain names in our universe benefited from WHF response to pandemic measures, but the reopening and expected “back to normal” moved the sentiment negative. Investors sold off certain names in the assumption that robust revenue growth observed in 2020 and 2021 would cool down. German based meal kit solution Hello Fresh (HFG.DE, up 6.87%) was a beneficiary of Covid related lockdowns. When releasing its 3Q21 financials the company increased its full 2021 revenue growth guidance from 45%/55% to 57%/62%, nonetheless it suffered a correction in the first 6 weeks of the year. [5] Similarly, telepresence leader Zoom Video Communications (ZM, down 45.48%) after benefiting from lockdown growth from different segments the company reported a 3Q21 revenue growth of “just” 35% year over year, after growing 191% 1Q21 over 1Q20. [6] Docusign (DOCU, down 31.48%) had a dramatic 42% share drop in the last week in November, after missing earnings and stating that revenue growth was slowing down after six quarters of accelerated growth. [7] The three companies have in common a subscription based revenue model that is sticky, while growth rate slowed down, the higher penetration and customer base is expected to stay in place. Many active portfolio managers see the stocks as “buy the dip” opportunities.

2. Food solution brands suffered a correction, while the companies producing fragrances and enzymes for plant based alternatives performed well. Analysis from Bloomberg Intelligence shows that the overall market for meat and dairy alternatives grew in 2021 to $35.6 billion from $29.4 billion in 2020. [8] The sector is expected to witness solid growth over the next decade, led by Asia, as concerns about environmental issues and better alternatives lead to greater uptake. The global food system is responsible for 21-37% of total greenhouse gas emissions, with meat and dairy production accounting for around 60% of this total, while providing only 18% of the calories and 37% of the protein we consume. However, individual companies in the sector suffered in 2021 from continued disruptions and investors that challenged the moat around their products.

Please note that all performance figures are showing net data. For illustrative purposes only

Beyond Meat Inc (BYND, down 47.87%) particularly, the only publicly traded company focused on alternative meat, had widely varying performance over the past two years. Global lockdowns in 2020 led to strong financial and stock performance as consumers bought more groceries and ate at home. The company also missed performance targets for 3Q21, citing inventory issues due to COVID disruptions. This performance is in contrast to companies like Novozymes A/S (NZYMB, up 53.71%), the Dutch bio-technology company that is the world’s largest for industrial enzymes, and Koninklijke DSM (DSM.AS, up 40.63%) that closed the year completing the acquisition of a leading European producer of pea and bean derived ingredients for plant based protein products. [9] The discrepancy in share performance of the brands versus the ingredient enablers seem to indicate that in 2022 the consumer facing names need to demonstrate that they can scale profitably. Despite the correction, plant based food solutions indicate they are here to stay.

3. In the Renewable Energy Equipment segment, it was a challenging year for both solar and equipment providers. Many manufacturers were hurt by rising input costs and supply chain bottle necks in 2021. However, we see a dichotomy between those based in and selling primarily to the US market that suffered, compared to foreign (particularly Chinese) manufacturers that had good performance over the year. In the US, the uncertain regulatory environment and the halting by congress of the Build Back Better legislation in December had negative consequences for companies based in that market. The Act would have included $555 billion in proposed federal clean energy subsidies, without which the valuations in this sector have come into greater scrutiny. [10] In contrast, Chinese equipment manufacturers fared better; with large customers based domestically within China, supply bottlenecks were less of an issue. Xinjiang Goldwind Science & Technology Co Ltd (HKG:2208, up 15.58%), for example, benefited from the Chinese government’s desire to substantially increase its renewable energy sources. Chinese companies in this sector also have relatively lower valuations compared to their Western counterparts, given their ties and reliance to Chinese state-controlled entities.

Please note that all performance figures are showing net data. For illustrative purposes only

4. The ten Fuel Cell & Electrolysers producers in CLMA, that were our best performing subsegment in 2020, all suffered a correction in 2021. However, according to Bloomberg NEF head analyst for hydrogen, Martin Tengler, “the year 2021 has been great for clean hydrogen.” This is because of increased production capacity and ambitious country targets for clean hydrogen over the next decade, with expectations for long term growth of this sector. Green hydrogen, which involves splitting water molecules using renewable energy sources, is still a nascent technology. It is primarily seen as a low-carbon fuel for sectors that are unable to use electricity to decarbonize, such as steel and cement.

Please note that all performance figures are showing net data. For illustrative purposes only

While stock performance was down last year, production facilities of this technology have surged. By November 2021, the cumulative number of large-scale projects announced had doubled since January to 522, according to the Hydrogen Council. A WSJ cites that nearly three-quarters of the new projects are expected to be partially or fully commissioned this decade, and of those, two-fifths are already funded or under construction. [11] In total, more than 40 countries are developing clean hydrogen strategies, and China will be the only country with giga watt scale clean hydrogen capacity next year, becoming the first country to have greater green hydrogen than blue hydrogen.


Climate Change ETF Performance (As of 30.11.21)








CLMA iClima Global Decarbonisation Enablers UCITS ETF (Acc)







CLMA iClima Global Decarbonisation Enablers Index







Performance before inception is based on back tested data. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 31/12/21. Please note that all performance figures are showing net data.


Download the PDF

Learn more about our Climate Change ETF

Sign Up to Insights

Tell us how we can help