Next come the “supercycle” years?

7 facts about climate change and pollution that have an impact on investors

Insights, Sustainable Value
21.05.2021 Temps de lecture: 3 minute(s)
Example of "Supercycle Investing": a wastewater treatment plant for water purification (bird’s eye view)

The coming decades are likely to become a “supercycle” for investments in clean water, lifecycle management, and more. © Getty

 

Unsettling reports from climate researchers and the scenario of an increasingly uninhabitable world have startled the public. Heat waves, hurricanes, unmatched wildfires and droughts are now more frequent. Polar ice melts and sea levels rise.

Here you will find seven facts about the root causes and how impact investing can mitigate them.

Unsettling reports from climate researchers and the scenario of an increasingly uninhabitable world have startled the public. Millions of mostly young demonstrators have mobilized in more than 125 countries to demonstrate every Friday and alert the rest of the population to take action.

The demonstrations are a reaction to the mounting evidence of global warming, with alarming consequences occurring right before our eyes:

  • Heat waves, hurricanes, unmatched wildfires, and droughts are now more frequent.
  • Water warms up and polar ice melts,
  • The combination causes sea levels to rise, resulting in flooding and erosion of coastal and low-lying areas.
  • At the same time, essential natural resources become more and more scarce for example, clean drinking water, to name just one.

Scientific organizations are a strong voice in the chorus of protests: For instance, more than 28,000 scientists just across German-speaking countries signed a statement in 2019 declaring that the concerns of the protesting students are justified and supported by the best available scientific evidence.

  

Infographic: The seven facts in detail

 

Swipe right & explore seven facts about climate change and pollution

 

  

Massive investments are required as part of the solution

The last of these facts is introducing a path to a potential solution: Thankfully, technology and new industries constantly evolve and can potentially mitigate the negative impacts of climate change and pollution. For instance, the exponential growth of renewable energy, driven by technological improvements over the past decade, can have a positive impact on the carbon footprint of businesses and private households. For a new installation, the cost of electricity of both wind and solar energy is now cheaper than nuclear and coal, and slightly lower than that of natural gas. Almost 90% of the increase in total power capacity worldwide could last year be attributed to the growth of wind, solar, and hydro power.

Governments are simultaneously announcing massive green infrastructure packages:

  • The European Union’s (EU) Green Deal aims to meet the targets of the Paris Agreement and making the trade bloc carbon neutral by 2050. The 1 trillion package includes funding aimed at projects mitigating climate change. Key legislation and policies, including an EU Emissions Trading System and national emissions targets for the transport, buildings and agriculture sectors have also been put in place.
  • Meanwhile, the US has returned to the global climate arena following Joe Biden’s arrival in the White House. The Democrats have introduced a wide-ranging climate bill, aiming at a fully decarbonized US economy by 2050 and will trigger multi-billion dollar investments into climate friendly infrastructure.

  

A supercycle for selected investments

Bright outlook for technologies and industries pioneering structural change

The coming decades will, in our view, be a supercycle for investments in clean energy supply, low-emission transportation, resource-efficient industrial production, and building construction, as well as clean water and lifecycle management. (Read more about these sectors: 6 pillars of the economy to making a positive impact with your investments.)

The globalization of climate policies across the globe and the aim of the world’s super-powers to reach zero emissions between 2050–2060 will boost such investments opportunities. So will additional government packages in favor of greening their economies. Over the next decades, we expect many interesting opportunities for long-term investors in these areas. (Read more about the Megatrends Model that Vontobel uses, in particular the Megatrend “Sustainable value creation”.)

  

For private investors

Think ahead, invest thematically

Thematic investments are suitable for building on an already diversified portfolio. However, they are less suitable if you are only initiating diversification.

Find out why

 

  

Icon: Ein Fragezeichen symbolisiert die Einladung zum Dialog

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Adding impact to a thematic investment approach


Thematic investment strategies
identify the companies best placed to benefit from the above-mentioned powerful trends (amongst many others) and participate in their dynamic growth stories to deliver attractive returns. Investors can select from a wide range of themes, ranging from future mobility concepts or e-sports to gender diversity.

By contrast, impact investing aims to achieve a positive effect in mitigating environmental and social issues, alongside achieving financial returns. At Vontobel, our impact strategies invest in businesses deemed best suited to drive progressive change or support such transition processes.

  

  

  

Worth reading in this context

 

 

  

Example image on the megatrend of technology conversion: A robotic hand tries to catch a goose feather, which slowly floats downward. © GettyImages

Investment ideas capturing the Zeitgeist

Don’t be taken by surprise by trends that were foreseeable. Instead, bring the “big picture” into sharper focus by integrating Megatrends into your portfolio.

Find out more about Megatrend Investing

  

How do I manage my portfolio by means of investment themes?

Our Megatrends team has identified 12 thematic approaches and made them investable.

Get to know the thematics

  

  

  

  

  

 

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