Brookfield Renewable Partners: Have Your Cake And Eat It Too

Brookfield Renewable Partners L.P. (BEP) is a globally diversified, multitechnology, owner and operator of renewable power assets. In my last article I wrote about ESG investing and whether Ecolab could be an addition to my portfolio. In this article I’ll take a dive into Brookfield Renewable Partners.

Business model
The business model of BEP is actually rather simple. They acquire and develop renewable power assets and businesses (mainly hydro, solar and wind), finance these assets with a mix of debt (investment grade basis) and equity and optimize cash flow and value utilizing their operating expertise. BEP locks in stable cash flows via long-term (usually 20-year), inflation-adjusted power purchase agreements (PPAs). These contracts are mostly entered into with utilities, distribution companies, and industrial users. Most of these counterparties have investment-grade credit ratings, and the weighted average remaining contract is for 16 years.

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ESG Investing: The Case of Ecolab

Ecolab Inc. (ECL), headquartered in St. Paul, Minnesota, is an American global provider of water, hygiene and energy technologies and services to the food, energy, healthcare, industrial and hospitality markets.

Lately, I've been tracking companies that rank higher on various ESG guidelines. ESG refers to the three central factors in measuring the sustainability and ethical impact of an investment in a company or business: Environmental, Social and Governance. For instance, Ecolab is the 2nd biggest position (after Microsoft) in the MSCI USA ESG Select Index. This index is optimized to be sector diversified, targeting companies with high ESG ratings in each sector.

The question is whether these criteria could help to better determine the future financial performance of companies and the potential return for its investors. Let's take a look at Ecolab and discuss whether it can be a good addition to your portfolio at current prices.

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