The net zero race
The climate transition provides opportunities for investors through companies providing solutions to other companies in this space, helping the economy reduce climate-related risks. These include energy, agricultural, industrial and construction solutions. Investing in higher carbon emitters should not be ruled out, as excluding such stocks is counterproductive to realizing future zero-carbon emissions gains, argues Alliance Trust.
Alliance Trust has pledged to net zero greenhouse gas emissions by 2050 and halve them by 2030, but believes it is wrong to punish industries or countries that face the most big hurdles to move to a low-carbon world. Marc AtkinsonHead of Marketing and Investor Relations at Alliance Trust, says: “Depriving these companies of finance at a time when they need it most can be more detrimental to a successful transition to a low-carbon economy.
“Avoiding investing in certain industries and companies entirely or selling existing investments in companies whose activities harm the climate are two options.
“But it may not bring us closer to a more resilient economy, or benefit society at large, so we use these options sparingly. While their carbon footprint may be significant, we believe that many of these companies are also part of the solution, not only because they plan to align their carbon reduction trajectory with the Paris Agreement, but also by researching and investing in alternative energy sources and carbon. capture technology.
An exclusion case for Alliance Trust are companies that derive a significant amount of business that may be phased out in the net zero world. “Our sense of which business activities we should exclude will evolve,” says Atkinson, “but we prefer engagement. Having frank but productive discussions with businesses is likely to be more effective in decarbonizing the global economy.
Positive solution stocks include Bureau Veritas, Schneider Electric, Kubota Corporation and Andritz.
Office Veritas is a global leader in the provision of carbon and energy consulting, verification and certification services. Its team of experts supports the development of bespoke energy and carbon management strategies to set goals, targets and management plans.
Schneider-Electric is a French multinational providing digital energy and automation solutions for efficiency and sustainability. It addresses homes, buildings, data centers, infrastructure and industries by combining energy technologies, real-time automation, software and services. It was ranked the most sustainable company in the world by Corporate Knights in 2021.
Kubota Company is a Japanese multinational specializing in the manufacture of a wide range of products and technologies to provide solutions in the fields of food, water and the environment. This includes agricultural machinery, construction equipment, engines, pumps, and water purification, sewage treatment, and air conditioning equipment. The company offers smart agricultural products to improve crop yield as well as water solutions.
To finish, Andritz is an international technology group providing plants, systems, equipment and services for various industries. Andritz Hydro is a global supplier of electromechanical systems and services for hydroelectric power plants and one of the leaders in the global market for hydropower generation.
Fossil fuel-based investments include BP in the UK, Exxon Mobil in the US and Petroleo Brasileiros in Brazil.
See also: Green investment solutions for global issues