Innovative companies are creating solutions to address pressures on scarce natural resources and the need for greenhouse gas emission reduction.
What is Clean Tech?
Clean technology (‘Clean Tech’), refers to companies who seek to have a positive environmental impact, by developing new technology across areas such as energy efficiency, smart grids, clean energy and sustainable resources.
Each day, more than 200,000 additional people populate the planet, further challenging how far natural resources must stretch to sustain human life. Clean Tech companies strive to create genuine solutions to help address these challenges.
The ‘Clean Economy’ is the rapidly growing universe of companies whose activities improve resource sustainability, support the energy transition (from fossil-based to zero-carbon energy production and storage) or address the issue of water scarcity.
Why consider investing in the Clean Economy?
Consumers are demanding more of companies and governments as concerns over the sustainability of human civilisation on earth deepen. Consequently, we are seeing the growth of Clean Tech investing, as more companies embrace the circular economy and respond to the need for change.
We believe businesses that are prepared to adapt should have a sustainable, competitive advantage by reducing their input costs over the long-term, and, they could see significant growth potential in the decades to come. We believe that this could provide investors with exciting, new investment opportunities in companies that should stand the test of time.
The world is changing, and we have identified three reasons why we believe now is the time for the Clean Economy:
- Environmental pressure is rising: In recent years the rising potential for human suffering and huge economic loss due to climate-related disasters has been driving more urgency than ever to manage carbon emissions and limit global warming. A lot has happened since nearly every nation on earth committed to a low carbon future by signing the Paris Agreement in 2015 but there’s still a long way to go and the transition to a low carbon future requires carefully balanced social and economic transformation.
- Awareness is rising: Awareness of the impact of pollution is being increasingly driven by governments, consumers and corporates. There is strong regulatory support across the EU (Green Deal), US (Biden's administration) and even China (carbon neutral commitment by 2060).
- Action is rising: Consumers are changing their consumption habits at a faster pace, while companies are investing massively in new clean technologies to avoid the rising cost of taxes and penalties from emissions and to guard against the impact of potential non-financial risks arising from a climate crisis.
These three combined are encouraging governments and companies to reassess their policies and start to implement meaningful change and invest in the circular economy and new Clean Tech.
Our Clean Economy strategy
Our approach to investing in the Clean Economy seeks to identify high-quality, growth-oriented companies operating across one of four key investment areas impacted by the finite amount of natural resources. We believe these are the areas which will provide innovative, new investment opportunities:
- Low Carbon Transport: Across the world, the demand for sustainable transport is increasing, providing investors with ample investment opportunities in electric vehicles, battery technologies and emission reduction systems.
- Smart Energy: The necessity and demand for greener homes is growing, helping to provide the impetus and resources for the development of energy efficient technologies. This is creating investment opportunities in renewables, greener homes and efficient factories.
- Agriculture & Food Industry: Companies are exploring new ways to meet the growing demand of rising populations while limiting the use of scarce water and land. This is providing copious opportunities to invest in firms that are developing food and agricultural technologies.
- Natural Resource Preservation: Public opinion is shifting and putting pressure on companies to better manage supply chains - and is providing investment opportunities in companies who are mitigating their environmental damage and evolving their practices.
We only invest in companies which demonstrably generate a share of their revenues from the clean economy through an investment approach combining fundamental stock selection with a proprietary impact framework.
We aim to provide transparent and measurable impact metrics focused on UN Sustainable Development Goals contribution towards environmental and societal issues, including:
Only 13% of global retail sales are transacted online, which will likely increase as smartphone adoption rises globally*
Ageing and Lifestyle
The number of over-60s is expected to triple in size between 2000 and 2050, creating challenges for companies and individuals*
The growth of the global middle class is at a 150-year high, boosting consumption in Asia and the developing world*
Why green energy is nowhere near bubble territory
Rising valuations for clean energy companies highlights the importance of fundamental analysis and a considered view
Sustainable diets: A new theme on the menu for investors?
While a more sustainable diet is a growing trend for consumers, investing in it is far from straightforward.
How new innovations in technology could help prevent a global water crisis
Population growth and increasing urbanisation around the world are outpacing water supply
 Source: Worldometer aggregate from United Nations Population Division, World Health Organization (WHO), Food and Agriculture Organization (FAO), International Monetary Fund (IMF), and World Bank, correct as at September 2020.
*Ageing & Lifestyle - US Department of Commerce, latest data available as of March 2018
*Connected Consumer - Citi Research, Citi GPS “Technology at work v3.0”, August 2017
*Automation - IFR World Robotics Report 2017, latest available data as of March 2018.
*Transitioning Societies - UN, correct as at March 2018
*Performance Drivers - AXA IM, correct as at 29 December 2017
Investment in equities involves risks including the loss of capital and some specific risks such as counterparty risk, derivatives, geopolitical risk and volatility risk. Some strategies may also involve leverage, which may increase the effect of market movements on the portfolio and may result in significant risk of losses.
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