Recent natural disasters, like the devastating floods in Pakistan, have highlighted the systemic risks to regional economies and global supply chains, as well as the breadth and depth of impact the world faces.
As a result, Tara Clee, ESG analyst at Hargreaves Lansdown said, increasingly, investors were concerned with whether their portfolio was on the right side of the green transition.
She added: “Considering environmental, social and governance (ESG) factors, alongside the usual financial considerations, can be a great way to ensure your investments are aligned to the net zero transition, and able to capitalise on the opportunities that may arise.
“But many fund managers go further and implement exclusions, ramp up engagement and, for those who want to be at the forefront of solving the climate crisis, invest with impact – investing in companies that have a quantifiable positive effect on the environment or society, such as those developing low carbon electricity.”
The drive to energy independence is also accelerating the transition to green energy.
For example, in the US, a number of large companies recently unveiled plans to build electric vehicle battery plants.
Pierre Debru, head of quantitative research and multi asset solutions at WisdomTree Europe, said: “Decades ago, the only way countries could be energy independent was to find massive deposits of oil.
“While we still use fossil fuels globally, energy independence in the coming decades will likely look quite different, and the countries that secure the best possible energy storage technologies could be in the best position as they deploy all sorts of renewable energy technologies to power their needs.
“To this end, there are going to be a lot of advances in regulations, energy storage technologies and all the while capital expenditures to build out all sorts of infrastructure and production capability.”
