Current trends are expected to continue. Renewable energy, especially solar and wind, will maintain its momentum. Over 40% of electricity in Europe now comes from renewable sources. Additionally, despite the currently challenging situation in the automotive market, the topic of electromobility will continue to grow, driven by more affordable models, longer battery life, and increased range. The topic of batteries is also becoming increasingly important for the energy system as a whole – more renewable energy means we need more storage capacity and a stronger grid. With battery storage and grid expansion, electricity can be transported more efficiently to the right places at the right times.

Our investment approach addresses challenges arising from megatrends. For example, the growing population and urbanisation lead to increased CO₂ consumption, and infrastructure needs. Additionally, the global development of AI is driving up electricity demand. We tackle these challenges in our funds by investing in solution providers across various sectors – energy, water, waste, recycling. We work closely with WWF Austria, which must pre-approve every investment, or it cannot be considered. Consequently, we focus primarily on pure plays, which are often smaller or mid-sized companies. Ultimately, all our investments must clearly demonstrate environmental benefits as a core component of their corporate strategy.

The answers to environmental risks – such as CO₂ emissions, global warming, water scarcity, and waste – arising from megatrends like population growth, urbanisation, or technological progress primarily lie in renewable energy, efficient mobility and recycling solutions, and resource-conserving water use.

Energy constitutes nearly two-thirds of the portfolio. Due to the Russian invasion of Ukraine, we have given energy a higher priority, taking into account energy autonomy and security policy. European ambitions for rapid expansion, and the Inflation Reduction Act, provide additional momentum. We observe innovative companies in the waste and recycling sector – such as Tomra, which offers state-of-the-art sorting machines that can finely sort household waste to produce reusable plastic. Or Trex, which manufactures composite decking from recycled materials. Unfortunately, the universe of water investments has recently shrunk somewhat. In the mobility segment, we primarily focus on public transportation and trains, as well as electromobility – currently, we are underweight in the latter.

There was a time when we were introduced to a new electric car manufacturer every week that would soon be entering the market through an IPO or SPAC. We did not participate in this segment – consumer tastes are very volatile and can change rapidly. Consequently, it’s challenging to determine which company or brand will have a lasting advantage. In the waste and recycling sector, there simply aren’t as many companies in the market. And of those that do exist, not all qualify under our strict investment criteria.

Sunnova installs solar systems for residential customers in the US. The business model is based over 90% on leasing or loan agreements – very few solar systems in America are purchased outright. This results in high initial costs for a solar system, which are offset by predictable cash flows from monthly payments made by the borrower or lessee over 25 years. For customers, the deal is beneficial from day one, as they save money compared to their electricity provider. Based on the currently installed systems and the cash flows they generate, Sunnova would be worth more than double its current valuation. However, the business model is very sensitive to interest rates – there’s a high financing need for solar systems, and cash flows are projected far into the future. Rising interest rates have negatively affected both aspects, but with the first rate cut from the Fed behind us, this concern is less pressing.

We see a lot of potential in the stock, as interest rates are decreasing, a better environment for rooftop solar in the US is emerging, and it has an extremely low valuation. The company also has a very high short interest of over 30%. We established our position in May 2024, and since then, growth has been nearly 200%. The focus now must be on generating cash.

First Solar is in the right place at the right time. Solar is booming in the US, and this is happening not only in Democratic states. Republican-led Texas, known for its oil and gas production, is now the largest producer of solar energy in America. First Solar is one of the last remaining companies to own production capacities for solar modules in the US, making it less vulnerable to geopolitical tensions with China. Moreover, the massive energy demand from AI and Big Tech firms is driving the demand for electricity and, consequently, solar energy. The biggest risk would be the repeal of the Inflation Reduction Act. But even in the event of a Republican victory, we see little risk because most of First Solar's value chain is located in Republican states. Therefore, we remain optimistic.

Siemens Energy had an eventful year. When the German government got involved with guarantees for the company in October 2023, the stock was trading at under 7 euros. What seems to have been missed on the markets is that Siemens Energy needed these guarantees because of its extremely strong order book.

Concerns from trading partners were partially justified: Siemens Energy has been struggling with quality issues in its wind division, Siemens Gamesa, for some time. However, what is often overlooked is that wind energy is only one segment. The turbine business, and particularly the Grid Technologies segment, are performing excellently. The latter is especially important for the further expansion of the electricity grid, which is becoming increasingly crucial. The company is excellently positioned in this area and has since grown over 400% from its „scary moment“. Thus, we see a positive future ahead.