The sustainable investor for a changing world
diving_sea_water_biodiversity_isr_1440x300
  • Home
  • A pandemic side-effect: Climate change, front and centre

A pandemic side-effect: Climate change, front and centre

ESG/SRI, Responsible Investing

BNP Paribas Asset Management
 

In a fast changing world, our focus is on achieving long-term sustainable investment returns for our clients.

Once the pandemic is past, the existential issues around climate change will still require action on an unprecedented scale. This may include changes in behaviour – beyond working from home and less (business) travel – and multi-trillion dollar investments in energy transition and environmental protection, says Edward Lees, co-portfolio manager in our environmental strategies investment group.

Fundamentally, from an environmental perspective, nothing has changed as a result of the pandemic in the sense that the problems that were here five or 10 years ago remain. If anything, the pandemic has reminded us not to ignore existential threats, to take them seriously and to look for opportunities for a coordinated response.

A welcome increase in awareness

The types of problems to be solved are unchanged, but what has changed for the better over the course of the pandemic is that public awareness has grown and governments are now on board, having set net zero emissions goals: for 2050 in the case of the EU, followed by Japan, South Korea, China and the US with 2060 targets.

This wave of awareness has significantly increased support globally to accelerate climate change mitigation measures. These net zero targets require major steps to be taken. This will involve trillions of dollars of expenditure, meaning trillions of dollars of investment opportunities and double-digit growth rates in climate-related industries over the next 10 to 20 years.

podcast Ed Lees exhibit 1

The growing realisation that climate and environmental issues require substantial action has meant that money has flowed to related market segments in anticipation of accelerated activity. Valuations of companies addressing the issues and providing solutions have risen.

How to help restore ecosystems?

Dealing with the fragility of ecosystems – water, land and air – is a multi-faceted investment area requiring technology and innovation.

On the water side, some key issues are wastewater and residual sludge treatment, pollution by plastics, as well as the overfishing of oceans and the restoration of coastal areas. There are opportunities in water efficiency to reduce our consumption and in desalination.

On land, problems such as plastic and waste disposal and biogas require action. We need sustainable agriculture, packaging, forestry and fertilisers. There is the search for alternative sources of protein and ways to reduce the water intensity of food production. There is a need for environmental meters and measuring equipment.

Issues relating to air concern carbon capture and filtration equipment to avoid pollution.

And in the human ecosystems, we should consider the impact of the built environment, the need for green buildings, and the possibilities of efficiency gains by using vertical farming.

podcast Ed Lees exhibit 2

Attractive opportunities in the environmental space

There is a broad and developing range of sectors, industries and businesses that present exciting opportunities to do good and benefit climate change, while targeting positive investment returns.

For instance, alternative proteins are an exciting new area, but equally there are opportunities in ways to industrialise the recycling of plastics by breaking them down chemically and reusing them. The pace of growth in this area is picking up.

In more traditional areas – wind, solar, battery and electric vehicles – development continues apace and, importantly, there is policy support.

In some areas the technology does not exist or is not yet used extensively. For example, decarbonising heavy transportation equipment such as ships and airplanes efficiently using fuel cells. Research is being done on nuclear fusion, which does not produce nuclear waste or involve the risk of meltdowns.

To sum up, the problems surrounding climate change have not been abated by the pandemic and will take trillions of dollars of investment to address. We believe this is an area that will offer investors exciting and rewarding opportunities for decades to come.


 

This material is issued and has been prepared by a representative of BNP PARIBAS ASSET MANAGEMENT Australia Limited (“BNPP AMAU”) AFSL 223418 ABN 78 008 576 449.

This material is produced for information purposes only and does not constitute:
1. an offer to buy nor a solicitation to sell, nor shall it form the basis of or be relied upon in connection with any contract or commitment whatsoever or
2. investment advice.

Opinions included in this material constitute the judgement of BNPP AMAU at the time specified and may be subject to change without notice. BNPP AMAU is not obliged to update or alter the information or opinions contained within this material. Investors should consult their own legal and tax advisors in respect of legal, accounting, domicile and tax advice prior to investing in the financial instrument(s) in order to make an independent determination of the suitability and consequences of an investment therein, if permitted. Please note that different types of investments, if contained within this material, involve varying degrees of risk and there can be no assurance that any specific investment may either be suitable, appropriate or profitable for an investor’s investment portfolio.
Given the economic and market risks, there can be no assurance that the financial instrument(s) will achieve its/their investment objectives. Returns may be affected by, amongst other things, investment strategies or objectives of the financial instrument(s) and material market and economic conditions, including interest rates, market terms and general market conditions. The different strategies applied to the financial instruments may have a significant effect on the results portrayed in this material.

All information referred to in the present document is available on www.bnpparibas-am.com

 

On the same subject: