Is there a green bubble on the stock market? ABGSC’s Christer Linde shares his view

Share prices for companies with a sustainability focus has done extremely well in recent years, both in the Nordics and internationally. This has led to a debate about a potential green bubble. ABG Sundal Collier’s co-head of research Christer Linde has a different view.
“As a theme, the sustainability trend is super strong, and the appetite from investors is huge. This is not something that will go away, especially not with all the political initiatives, such as the EU taxonomy pushing this trend even further”, Christer Linde says.
However, even if the trend is here to stay for a long time, it obvious that many green tech companies have very high valuations today.
“Some of these have no profitability and some will fail in the end, so as an investor you have to be selective”.
Christer Linde believes that investors will be looking more at structural trends than specific “green labelled” companies down the road. He believes that it will be just as important to see what companies such as ABB can do within this field.
“Automation is a key driver and so is also electrification. The electrification of personal and commercial vehicles will create a whole new eco-system. We’ve only just seen the start of it. This is a revolution of the same magnitude as when we replaced horses with cars one hundred years ago.”
According to Linde, this will have huge implications for infrastructure-related issues such as electricity grids, charging stations and other related services.
A challenge for the financial industry is how to value companies in a transition process, going from “brown” to “green”, such as energy companies being dependent on oil production while also developing wind and solar energy. Another example is Swedish steelmaker SSAB, which is the country’s largest emitter of CO₂ while also running its Hybrit joint venture, aiming at revolutionising steelmaking by replacing coal with hydrogen.
“Maybe investors need to dare to invest now without being punished for taking that risk”, says Linde.
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