Charging Tesla Model S. Photo by Jeff Cooper (jecoopr)
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Musk’s oil tweets should not divert focus from renewables

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Elon Musk’s calls for increasing U.S. oil and gas output in the wake of Russia’s invasion of Ukraine will not deter investors from positioning their portfolios towards renewable energy, despite the “negative” impact this would have on electric vehicle maker Tesla, said a leading financial advisor.

At the same time, all eyes were on crude oil prices on Monday following the news over the weekend that the US administration is discussing a potential ban on Russian oil imports with its European allies. Prices soared at the open in Asia, with Brent crude rallying $21 to trade slightly above $139 a barrel before slipping back below $130.

“Hate to say it, but we need to increase oil & gas output immediately,” the Tesla boss posted to his more than 76 million Twitter followers on Friday night. “Extraordinary times demand extraordinary measures,” Musk added while the Ukraine-Russia crisis has led to a surge in oil prices.

Nigel Green, chief executive and founder of deVere Group, a leading independent financial advisory and fintech, said Elon Musk was right to respond to the immediate crisis and the fallout from it, with a call for increasing oil and gas production.

“This is because the investment to date in renewables has not been sufficient to react at scale when something of this magnitude happens. It shows how we should have gone harder and faster on green energy before now,” Green said.

The Ukraine-Russia situation is helping to drive oil and gas prices around the world, the deVere CEO said, adding that investors who have properly diversified portfolios should not suddenly move away from sustainable alternatives.

The case for green energy being an investment megatrend of the decade has not changed; the fundamentals remain the same, he said.

Green momentum to continue

“Despite Musk’s comments, the trend is set to gain further momentum for several reasons,” explained Green.

“First, governments and regulators are becoming increasingly pro-ESG which boosts investor confidence.  Second, as millennials, who are statistically more likely to seek responsible investment options, become the major beneficiaries of the largest intergenerational transfer of wealth – an estimated $30 trln in the next few years – we can expect both retail and institutional investors to continue to pile into ESG.

“And third, the pandemic has focused minds on the fact that the health of our planet directly affects human health which, in turn, affects the way we all live and work.”

As sustainable investments move from a ‘quirk’ or ‘nice to have’ to a legitimate portfolio diversification tool that delivers profits with purpose, deVere last year announced it was advising clients on socially responsible investing, with the aim of positioning $5 bln in environmental, social and governance (ESG) investments within five years.

In addition, deVere also became a founding signatory of The Financial Alliance for Net Zero, the UN group for financial institutions to make credible net zero commitments through the UN’s Race to Zero project.

“Investors need to ensure now more than ever that their portfolio is properly diversified to best-position themselves to sidestep risks and seize the opportunities,” Green concluded.

“Musk says we’re living in ‘extraordinary’ times. He is right, but these do not last forever, as financial history teaches us, and investors need to think carefully before rushing to reposition portfolios away from future-focused alternatives.”