Marcum 2021 Year-End Tax Guide

finding out that millennials care about the environment and are sustainable investors; they look at a company’s ESG policies to make investment decisions. This fits well into the commercial solar space, as these projects tend to hit many buttons for millennials, such as reduction in greenhouse gases and living off the grid. To demonstrate the power of the millennials, let’s remember the rise of Robinhood, which created more than 10 million new investors and wreaked havoc on several private equity firms that had to cover short positions in a virtual nanosecond. GOVERNANCE The third part of the ESG movement is governance. Governance factors indicate the rules and procedures for countries and corporations, and allow investors to screen for governance practices as they would for environmental and social factors. Opinions on the governance interests should be prioritized in corporate decision-making are split. More than 20% of S&P 500 companies have tied some part of their CEOs’ compensation to ESG, primarily on the governance side. Employees, investors and governments want these companies to prioritize corporate responsibility over profits; this is especially appealing to the millennials and Gen Zs. Commercial solar projects fit into the governance mandate where a city or township might enter into a project in order to reduce its electric consumption, while not omitting any greenhouse gases. MARCUM RECOMMENDATION The ESG movement is here to stay, and companies both public and private need to adopt ESG policies to attract investors and capital. Capital markets will continue to put pressure on companies and governments to force change and expand their ESG profiles. ESG will also create new market segments and opportunities where commercial solar projects will be a dominant player and a multi-billion-dollar a year segment.

solar installations rose to a record of 19.2 gigawatts in 2020, which represents a 46% increase from 2019 installations of 12.2 gigawatts. Commercial solar installations through June 30, 2021, stood at 10.7 gigawatts and are projected to top 24 gigawatts for all of 2021, according to Wood Mackenzie. In contrast, China will place into service 90 Gigawatts of new solar projects in 2021, so here in the U.S. we have a ways to go. Even with robust growth in 2021, the American commercial solar Industry is experiencing COVID-19 delays, which will push some projects into 2022. Many developers are experiencing supply chain issues in securing PV panels from China or neighboring countries and steel for carport shade structures. Commercial solar installations are still expected to quadruple by 2030, as more corporations, tax- exempt entities and municipalities roll out ESG policies in the coming decade. There is tremendous projected growth in the commercial solar space, with the Biden Administration looking to restore the solar tax credit to 30% and extend it for an additional 10 tax years to promote continued development. This is just one of several energy incentives proposed by Congress, but that seems to change on a daily basis. The financial services industry is also pushing the ESG agenda buy forcing companies to evaluate or create ESG policies before any new investments by BlackRock. For example, BlackRock, which controls $7 trillion in assets under management (“AUM”), issued a letter to every CEO in which the company has an investment interest. The company recently advised, “In a letter to our clients today, BlackRock announced a number of initiatives to place sustainability at the center of our investment approach, including: making sustainability integral to portfolio construction and risk management; exiting investments that present a high sustainability-related risk, such as thermal coal producers; launching new investment products that screen fossil fuels; and strengthening our commitment to sustainability and transparency in our investment stewardship activities.” SOCIAL Social factors to consider in sustainable investing include a company’s strengths and weaknesses in dealing with social trends, labor, and politics. A focus on these topics can increase profits and promote corporate responsibility. As millennials continue to be the fastest growing sector of the labor force, companies need to adjust their thinking. We are

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