The contrarian in the room

Key takeaways:

• Several factors drove our conviction in the energy sector: oil companies have become more fiscally responsible, valuations in European oil companies are attractive, the supply/demand dynamics look favourable, and inflation will be stickier than expected.
• One of the good unintended consequences of the ESG movement is that it enforced capital discipline on an industry that has historically – like mining – has been a bit ill-disciplined when it comes to capital investment.
• We don’t look at where a company comes from, but rather where it is going. The same applies when looking at ESG criteria. The scientists, technologists and cash flows from big oil can be used to help us with the energy transition.