Cars and trucks are responsible for nearly one-fifth of carbon emissions in the US, and electric vehicles (EVs) represent the future that will replace them. While the vehicles may get most of the media attention, it’s the battery economy, which also supports renewable energy storage systems and grids, that is at the heart of the climate transition and offers opportunities for sustainable investors. Morgan Stanley recently called batteries “the new oil,” and Goldman Sachs says we’re in the middle of a “Great Battery Race.”

As EV makers try to improve their ESG ratings, avoid supply chain constraints, and have the most competitive product on the market, there’s great potential for disruption in the battery sector. We’re seeing new chemistries and next-generation technologies emerge. 

• To avoid using cobalt, most of which is mined in the Democratic Republic of Congo, where child labor is rife, some companies are turning to lithium iron phosphate or LFP batteries. 

• The world’s biggest battery maker is among those developing cheaper sodium-ion batteries. 

• Solid-state battery companies like Solid Power and QuantumScape have raised money from Ford, BMW, and Volkswagen. 

• There’s recycling of lithium-ion batteries for raw materials, and some miners are looking for reserves in countries with more stability and human rights protections.

It’s great to see such innovation in this rapidly growing ESG space. Hit reply and let us know how you’re thinking about the climate transition.