By Keren Concepcion G. Valmonte, Reporter

FIRMS with a focus on renewable energy (RE) are becoming popular as investors expect the energy sector to benefit from the country’s recovery story and because of the environmental, social, and governance (ESG) “megatrend.”

“Companies with renewable energy narratives are seen to be gaining traction,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message on Friday.

“First, this is due to the developing prospects of the energy sector in light of the expectations that the economic recovery will further strengthen this year. A stronger economy will require more energy which in turn would be beneficial for our power generating firms,” he added.

Diversified Securities, Inc. Equity Trader Aniceto K. Pangan also noted the move of international finance institutions to “focus their financing on RE projects for the transition to clean energy supply due to the catastrophic effects of climate change.”

“Market appetite for RE-focused companies will continue to be strong and will get stronger as the devastation effects of climate change [become] a big threat not only to the environment but most especially to human lives and other resources that support earthly lives,” Mr. Pangan said in a text message on Friday.

First Metro Investment Corp. (FMIC) Head of Research Cristina S. Ulang said the interest in RE-focused firms is “part of the ESG megatrend of the evolving endemic global economy.”

“Sustainability rating companies abound and the ESG scoreboards are building up even for local listed companies. Local and foreign investors are taking notice of the high scorers and are investing in these companies,” Ms. Ulang said in a separate Viber message on Friday.

The Securities and Exchange Commission (SEC) has recently issued draft guidelines for Sustainable and Responsible Investment Funds or any fund that would want to focus on investments in sustainability or those with a focus on ESG.

The regulator, along with the Association of Southeast Asian Nations (ASEAN) Capital Markets Forum, is also developing an ASEAN Sustainable and Responsible Fund Standards, which will cover the disclosure and reporting requirements of fund managers in the region.

Meanwhile, more companies are also adopting more sustainable and environment-friendly investments.

Mr. Tantiangco noted that the government has been supportive of the RE sector.

“It now boils down to whether the local economy can really grow stronger this year. If it is able to do so, then it would mean stronger demand for energy which in turn would be advantageous for our renewable energy firms,” he said.