Oil and gas still come out on top amidst environmental awareness + chipmakers struggle to find employees
Despite all the talk on ESGs this year, oil and gas still outperformed their sustainability-oriented peers, according to the Financial Times. As of 29 December, iShares MSCI global energy producers ETF was up 37%, propelled by US energy giants Exxon and Chevron, who grew 48% and 40%, respectively in 2021. This compares to the Parnassus Core Equity fund — the largest US ESG fund — which lagged behind with 28% growth in 2021 while BlackRock’s iShares ESG fund ended the year up 30%.
Lower performance is to blame for dampening ESG sentiment: ESG darlings Denmark’s Orsted and Vestas both saw their performance fall in 2021 due to higher costs on manufacturers and lower wind speeds across Europe. Slowdowns like these caused a reversal for the ESG boom in 2020 and early 2021 as investors reallocated their financing to more lucrative ventures, such as oil and gas.
The crossover event the global economy definitely didn’t need: Labor shortages hit chipmakers. Chipmakers are vying for skilled labor as they work to staff new facilities being built to address the world’s semiconductor shortage, reports the Wall Street Journal. Although many of the processes used at chip fabrication plants are automated, they still require thousands of college-educated labor to operate them — especially engineers, technicians and researchers.
Can’t AI your way out of this one: The crunch has led producers like Intel to pledge upwards of USD 100 bn investments in chip factories, which would require staffing 70-90k workers in the US alone by 2025. In Taiwan, the average monthly shortfall in workers in the industry hit 27.7k in August last year. The semiconductor shortage, which began early in 2021 and is due to a surge in demand for electronics, has resulted in shortages in everything from cars to phones to gaming consoles.
The race to staff these facilities is growing all the more urgent as chip sales are expected to rise 9% in 2022 to reach a record USD 600 bn, according to a report by Euler Hermes (landing page) picked up by CNBC. Demand for hardware (such as TVs and laptops) may normalize from its peak in the past two years while semiconductor demand may take a hit from supply chain disruption in 2022, both leading to lower prices, the report said.