Unsustainable human civilization 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 $3 trillion by 20253, up from $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 topics 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 and. 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.
- Recycling and 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.
1 Source: https://www.investopedia.com/terms/c/cleantech.asp 19 April 2020
2 Source: Worldometer Aggregate der United Nations Population Division, World Health Organization (WHO), Food and Agriculture Organization (FAO), Internationaler Währungsfonds (IWF) und Weltbank, aktualisiert im Sepember 2020.
3 http://www.climateaction.org/news/clean_tech_market_to_exceed_3_trillion_by_2025/ 13. September 2020
4 Worldometer, Stand 1. Juli 2020
5 The global price tag for 100 percent renewable energy: $73 trillion, Yale Environment 360, Yale School of the Environment, 20. Dezember 2019
1/ Environmental pressure is rising
2017 was the biggest year on record for natural disasters and 8/10 of the costliest natural disasters on record have occurred since 2000, underscoring the urgent need to manage carbon emissions and limit global warming.
2/ 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 GDP, in a bid to preempt civil unrest over high levels of pollution.
3/ 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.
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