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’s. CleanTech companies are firms 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 and CleanTech is creating genuine solutions to help address these challenges. This need for change is driving the global CleanTech market and it is anticipated to reach US$3 trillion by 2025, up from US$601bn in 2014.
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 they will provide innovative, new investment opportunities.
1. 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.
2. 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.
3. 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.
4. 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:
1. Environmental pressure is rising:
2017 was the biggest year on record for natural disasters [WKH(1] [CC2] and 80% of the costliest natural disasters on record have been since 2000, underscoring the urgency 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 pre-empt civil unrest over high levels of pollution. [EG+ please don’t add links, no link needed for this]
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. Therefore, we believe it is now essential for investors to look at resource sustainability factors from a risk mitigation perspective. [EG+ please don’t add links, no link needed for this]
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.
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Just 9% of retail transactions are made online today, which will likely grow as smartphones adoption rises globally^
Forecast to grow 10-15% annually until 2025, the robotics industry is rapidly changing how we live and work%
Ageing and Lifestyle
The number of over-60s is likely to grow more than five times faster than the under-60 population until 2030*
The growth of the global middle class is at a 150-year high, boosting consumption in Asia and the developing world#
1 Source: https://www.investopedia.com/terms/c/cleantech.asp
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 December 2018.
4 Source: AXA IM, Bank of America Merrill Lynch, The Clean Revolution, December 2017. Annual records for natural disasters are since records began in 1880; data for costs of natural disasters are since insurance records began in 1950.
* Source: US Department of Commerce, latest data available as of March 2018
^ Source: Citi Research, Citi GPS “Technology at work v3.0”, August 2017
% Source: IFR World Robotics Report 2017, latest available data as of March 2018
& Source: Financier Worldwide, “Investing in the clean technology revolution”, January 2016\
# Source: UN, correct as at March 2018