Unsustainable human civilisation on earth is now a reality. Awareness of this is steadily rising among governments, companies and consumers alike, creating opportunities for investors across the clean economy.
What is CleanTech?
Clean technology, commonly referred to as CleanTech, was first introduced in the late 1990’s1 and 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 planet2, further challenging how far natural resources must stretch to sustain human life, and CleanTech is creating genuine solutions to help address these challenges. This need for change is driving the global CleanTech market and this market is anticipated to reach US$3 trillion by 20253, up from US$601bn in 2014.
What does CleanTech mean for investors?
Consumers are demanding more of companies and governments, and they are increasingly lobbying them to make changes to their environmental policies, as the fear of unsustainable human civilisation on earth deepens. Consequently, we are beginning to see a shift to CleanTech investing, as more companies embrace the circular economy and respond to the need for change. 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.
Investing in the Clean Economy
The ‘clean economy’ is the 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.
We have identified four key investment areas which are impacted by the finite amount of natural resources and we believe 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.
Why now for the Clean Economy
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: There are around 200,000 more people on the earth every day4, creating more urgency than ever to manage carbon emissions and limit global warming. The scale of this change is enormous, with $73trn needed by 2050 to make the transition from fossil fuels to renewable energy5.
- Awareness is rising: Awareness of the impact of pollution is also increasingly driving individuals to lobby governments for change. For example, the Chinese state curtailed industrial production to the detriment of the country’s Gross Domestic Product (GDP), in a bid to pre-empt civil unrest over high levels of pollution.
- Action is rising: These pressures are steadily rising on the corporate agenda, and companies increasingly care about, and therefore act on, environmental concerns because their consumers care. Thus, we believe it is now essential for investors to look at resource sustainability factors from a risk mitigation perspective.
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 CleanTech.
Does politics matter to equity investors?
Do politics matter to equity investors? Amanda O’Toole and Dani Saurymper share their views and considerations on the matter. Does
The Evolving Economy - A fresh approach to equity investing
The way that companies do business has changed dramatically over the last 20 years, but many investors’ approach to equities has remained the same.
When innovation becomes investable
Distinguishing innovation from investment reality is crucial when investing. Dani Saurymper, Jeremy Gleeson and Tom Riley demonstrate how to tell the difference.
Forecast to grow 10-15% annually until 2025*, the robotics industry is rapidly changing how we live and work
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*
The Evolving Economy at AXA Investment Managers
Established thematic investor
30-year track record of thematic investing and product innovation
Innovative research structure
Collaborative research structure to prioritise Evolving Economy exposure over traditional geographic and sector information
Deep insight to performance drivers
Our proprietary thematic exposure database quantifies Evolving Economy exposure across a universe of c.11,000 companies*
Active, long-term approach
We distinguish between short-term investment hype and investment reality by focusing on long-term commercial viability.
1/ Source: https://www.investopedia.com/terms/c/cleantech.asp - 19 April 2020
2/ 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.
3/ http://www.climateaction.org/news/clean_tech_market_to_exceed_3_trillion_by_2025/ - 13 September 2012
4/ Worldometer, as at 1 July 2020
5/ The global price tag for 100 percent renewable energy: $73 trillion, Yale Environment 360, Yale School of the Environment, 20 December 2019
*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.
This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
Issued in the U.K. by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the U.K. Registered in England and Wales, No: 01431068. Registered Office: 22 Bishopsgate, London, EC2N 4BQ. In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.
This promotional communication does not constitute on the part of AXA Investment Managers a solicitation or investment, legal or tax advice. This material does not contain sufficient information to support an investment decision.
Produced in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales No: 01431068. Registered Office: 7 Newgate Street, London EC1A 7NX.