Is a strong ‘green’ economic recovery in sight?

May 21, 2021


 

We believe the rebound from the Covid-19 crisis is likely to be the most environmentally friendly economic recovery on record. Fueled by abundant liquidity, investors are flocking to back myriad projects in renewable energy, electric vehicles, plant-based food, social inclusion and the circular economy.

These flows are expected to bring enduring economic benefits: from reduced waste production, to cleaner and cheaper energy, to more resilient and climate-friendly agricultural practices. Achieving net-zero carbon status by 2050 has become a more realistic prospect too, beyond just ‘buying green’. It is no wonder that, a recent correction notwithstanding, the companies providing innovative solutions and the support for transition across economies have seen their stock prices rise.

In our view, innovation alone is not going to solve the planet’s most pressing problems. Sustainable investing requires a pragmatic approach and should not be limited to loftily valued ‘solution providers’. When profits cease to matter, you know problems are brewing. We believe investors should embrace the successful implementers of sustainability solutions into business practices that drive efficiency, build brand value, and help companies remain relevant in a changing world.

Andrew Parry, portfolio manager, Newton

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