The net zero opportunity and the Ukraine invasion
Welcome to our seventh annual impact report for the Responsible Global Equity Strategy.
2021 ended with a growing optimism that the intensity of the pandemic was starting to fade and economic activity reigniting in most regions, despite existing uncertainties around the impacts of inflation, the speed of the monetary policy response, and global supply chain disruptions. However, the brazen invasion of Ukraine by Russia has shaken the global landscape, and whilst it is hard to look beyond the immediate humanitarian tragedy, the conflict has also served to exacerbate the inflationary backdrop and performance headwinds that global growth oriented investors began to feel from the middle of last year.
This watershed moment in modern history has rocked the established international order and triggered a chain of far-reaching implications, which will take time to understand. Firstly, energy and food security are now firmly in the spotlight, with an acute awareness both of how energy dependent we still are on hydrocarbons from volatile regions of the world, and how fragile supply chains can be in a time of shifting geo-politics. The conflict has the potential to worsen global inequality, inflame the growing cost-of-living crisis, and undermine nascent awareness of the importance of positive diversity, equity and inclusion trends.
Yet one possible positive mid-term consequence could be an acceleration of investment into renewable energy solutions, both increasing our energy independence, and driving a faster energy transition. Even climate change sceptics must recognise that renewables represent one of the most secure sources of energy, and we will be urging policymakers to use this crisis to accelerate not only a green energy transition, but also a just energy transition. According to the World Energy Outlook 2021, we need to spend $30trn by 2030 on energy efficiency, renewable energy and infrastructure to get remotely close to net zero emissions by 2050, and we believe this could lay the foundations for better balanced global economic growth, whilst protecting biodiversity, employment and putting the world on a Paris-aligned 1.5C degree pathway.
We believe that net zero is still the best concept scientifically, and politically, with which we can achieve co-ordinated action to reduce the impacts of climate change – and we have a duty to keep engaging our investee companies on the issue. It is a practical framework that recognises that we cannot decarbonise everything, and that every country’s starting point is different. In this year’s report we further expand upon our net zero disclosure, with more granular information about how all of our investee companies align to the Net Zero Investment Framework.
It is hard not to be daunted by the sheer scale of the challenges that confront the world today, but this only spurs us on to stay true to the ethos of our Responsible Global Equity Strategy, which will record its 25th anniversary next year. Our mission is to safeguard our clients’ ethical and sustainable interests, to deliver consistently good performance by investing in businesses that are providing sustainable solutions to global challenges, and to generate meaningful, measurable positive impact, mapped against the framework of the UN SDGs, through the power of active ownership. This motivates us every single day, we thank you for your immense trust in us, and we will keep reporting on the progress that our companies are making.
Download the full report
Read in-depth engagement case studies and learn how portfolio holdings correspond to the seven sustainability themes including ‘Connect & protect’, ‘Energy transition’ and ‘Resource efficiency’.