In a Q&A session at Sarasin & Partners’ 2024 Spring Seminars, Natasha Landell-Mills, Partner and Head of Stewardship and Ben McEwen, Climate Analyst discussed progress towards net zero and its often-overlooked investment upside.
There can be little doubt that climate change is one of the biggest threats we face. But every coin has two sides. Flipped on its head, tackling climate change and the global shift to a lower-carbon economy could throw up some exciting investment opportunities.
How we source and use energy must clearly change, but we must also invest significant capital in all areas of the global economy, from clean transport to sustainable buildings, agriculture, materials and digital technology.
According to the Intergovernmental Panel on Climate Change and other estimates, we must increase annual climate-related spending by several orders of magnitude if we are to keep global warming to 1.5°C, as required by the Paris Climate Agreement. While projections vary, it is estimated that we will need to reach annual climate spending of $6 trillion by 2040, and to continue to invest at this level[1].
This should offer important investment opportunities. However, much of the media narrative has been around governments dragging their heels and frustrating policy U-turns. Look more carefully, and there are signs of progress, and real strides being made by the private sector on the road to making net zero a reality.
In 2023 the world’s new renewable energy capacity grew by 50%, with solar PV leading the charge– and it is not a one-off. Compared with the past five years, solar PV and onshore wind deployment through 2028 is expected to more than double in the United States, the EU, India and Brazil. And renewables are getting competitive, with prices for solar PV modules declining by almost 50% year-on-year[2].
Clean tech is thriving. This is the upside we are focused on, alongside our ongoing company and policy outreach to drive faster change.
[1] Global Landscape of Climate Finance, 2021, & IPCC
[2] International Energy Agency, Massive expansion of renewable power opens door to achieving global tripling goal set at COP28, 11 January 2024, IEA Renewables 2023 report and IEA Renewable Energy Progress Tracker
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