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A number of large utilities and energy companies are adding renewable assets to their extensive portfolios of carbon-emitting power plants and oil projects. Should environmentally conscious investors embrace these moves?

The question is gaining urgency amid what looks like a corporate-wide pivot toward a greener future. In one of the most noteworthy examples, international oil giant BP PLC announced last year that it will become an integrated energy company, underpinned by aggressive expansion into renewable energy.

For investors who embrace ESG principles (they invest in companies with high environmental, social and governance standards), it may be easy to feel cynical about the trend. Indeed, it can be put down as so-called greenwashing, where companies use green initiatives as a kind of marketing strategy, obfuscating their carbon-emitting ways.

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Martin Grosskopf, a portfolio manager at AGF Investments who manages the firm’s sustainable investing strategies, recalls that several years ago many of these companies were putting up roadblocks to controls on emissions.

“There is a legacy that I think people need to be aware of. There are quite a few very carbon-intensive companies that are suggesting that they are part of the solution. I take it with a grain of salt,” Mr. Grosskopf said.

Suncor Energy Inc., the Canadian oil sands giant, announced plans for a 400-megawatt wind farm in Alberta in 2019. However, construction of the Forty Mile Wind Power Project was put on hold last year after the price of oil fell sharply. (Phone inquiries made Tuesday by The Globe and Mail to Suncor’s renewable energy stakeholder line did not go through.)

But is the greenwashing label too harsh in many cases? Some observers say that any move toward renewable assets can be embraced by investors as an important step toward addressing climate change, no matter how carbon-intensive a company may be.

Tom Mitchell, a managing director at Cambridge Associates, a Boston-based investment firm with an emphasis on sustainability and impact investing, pointed out that his clients (largely endowments and foundations) should rightly be skeptical over whether an oil company can lead the way to a low-carbon future.

But he adds: “Climate change is a significant challenge, and there is not one solution. There is certainly the need to have integrated energy companies on board, working toward lower carbon sources of energy.”

“We have some clients who prefer not to own fossil fuel companies, period. Others say that if we are going to own, we want to engage,” Mr. Mitchell said.

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Lindsay Patrick, head of sustainable finance at RBC Capital Markets, noted that ESG investing flowed largely from the idea that investors want to align themselves with companies that do no harm. But she says she believes the biggest investor demand today is for a diversified portfolio drawn from companies that are integrating ESG factors into their businesses.

Even a portfolio that focuses almost entirely on renewable energy companies will likely not line up with the goal of many developed nations to attain net-zero carbon emissions by 2050.

“If you really believe in getting to net-zero and you really want to align your portfolio, you have to go beyond that,” Ms. Patrick said. “If we put all of our investments into renewable energy, would that get us to a net-zero economy by 2050? The answer is no.”

There may be room in ESG portfolios for carbon-emitters, then, if investors are willing to believe that these companies are being authentic in their pursuit of greener assets. Ms. Patrick said her experience is that companies are hyper-sensitive to the greenwashing label and don’t want to expose themselves to reputational risk.

What’s more, the financing that underpins green initiatives must meet guidance that adds transparency and ensures that the dollars line up with the goals, which should ease some investor concerns. The International Capital Market Association, for example, publishes a climate transition finance handbook.

But even skeptics can agree on one thing: The corporate tone on climate change is shifting.

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“Let’s face it: Social cred is an incredibly important factor here. Where 20 years ago you could get away with being a climate denier or skeptic, today you can’t,” Mr. Grosskopf added.

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