Marketing Communication. For Professional Investors.
infrastructure. Long-term plans need long-term solutions funded by long-term capital. This will require ongoing political, corporate and popular support. We are starting to understand the benefits of becoming more sustainable, but we need to continue to educate the world that this is very much in our self-interest.
Broaden your horizons
Broad governmental support should give investors the confidence to explore investment opportunities. Many companies across vari- ous sectors are providing solutions to decarbonise and futureproof their industries. The investment universe ranges from solar and wind energy to batteries, electrification, fuel cells, green buildings, biofuels and pollution control.
These investment ideas are tied to a clear growth opportunity, which will increase in line with the escalating global policy response. For example, the EU has set hydrogen – a source of clean energy if generated through renewable energy – as a key instrument for its 2050 Green Deal objectives. As a result, invest- ment in renewable hydrogen in Europe is forecast to reach between €180bn and €470bn (£158bn-£412bn) by 2050². Turnover in the hydrogen economy is expected to increase from €2bn (£1.7bn) to €140bn (£123bn) by 2030³. Additionally, the International Energy Agency forecasts 13% annu- alised growth in the global offshore wind market and a 15-fold increase in capacity by 2040, creating a $1trn (£724bn) industry⁴. Distribution of this power is as important as its creation and requires similar levels of innovation and capital. Existing grid net- works need updating, while the energy storage challenge requires immediate attention. These new technologies align with a com-
mon theme: creating a world that protects the planet while also building resilience to future challenges.
Sustainable returns For investors, this should chime with targeting sustainability while also expecting returns. We should not commit blindly to ideas that promise a greener future – rigorous investment processes are vital.
There is now substantial evidence showing companies with strong environmental credentials outperform those that are less commit- ted. This research also confirms that companies working to resolve environmental challenges can outperform those that are not. These future-focused companies are already pulling ahead in investment portfolio performance while reducing some key risks. This performance can be more stable than peers’, as historically they have tended to suffer less in downturns. This, however, will have to be monitored as valuations rise.
Future first At BNP Paribas Asset Management, we are exploring opportuni- ties arising from this once-in-a-generation chance to shape a better future – all while targeting attractive returns and managing risks. All of our strategies integrate environmental, social and govern- ance considerations, and we offer thematic and impact funds cov- ering a wide range of future-focused ideas. We are pleased to see investors committing to sustainability themed opportunities. Covid-19 has shown us that we cannot control the future, but we need to be ready for it. As investors, we can help the world prepare – and ensure our portfolios are prepared, too.
2) Questions and answers: A Hydrogen Strategy for a climate neutral Europe, European Commission, 8 July 2020 3) Leaked: EU hydrogen strategy eyes €140 billion turnover by 2030, PV Magazine, 19 June 2020 4) Offshore Wind Outlook 2019, World Energy Outlook special report, IEA, November 2019
BNP PARIBAS ASSET MANAGEMENT UK Limited, “the investment company”, is authorised and regulated by the Financial Conduct Authority. Registered in England No: 02474627, registered office: 5 Aldermanbury Square, London, England, EC2V 7BP, United Kingdom. This material is issued and has been prepared by the investment company. This material is produced for information purposes only and does not constitute: an offer to buy nor a solicitation to sell, nor shall it form the basis of or be relied upon in connection with any contract or commitment whatsoever or investment advice. Opinions included in this material constitute the judgment of the investment company at the time specified and may be subject to change without notice. The investment company is not obliged to update or alter the information or opinions contained within this material. Investors should consult their own legal and tax advisors in respect of le- gal, accounting, domicile and tax advice prior to investing in the financial instrument(s) in order to make an independent determination of the suitability and consequences of an investment therein, if permitted. Please note that different types of investments, if contained within this material, involve varying degrees of risk and there can be no assu- rance that any specific investment may either be suitable, appropriate or profitable for an investor’s investment portfolio. Given the economic and market risks, there can be no assurance that the financial instrument(s) will achieve its/their investment objectives. Returns may be affected by, amongst other things, investment strategies or objectives of the financial instrument(s) and material market and economic conditions, including interest rates, market terms and general market conditions. The different strategies applied to the financial instruments may have a significant effect on the results portrayed in this material. This document is directed only at person(s) who have professional experience in matters relating to investments (“relevant persons”). Any investment or investment activity to which this document relates is available only to and will be engaged in only with Professional Clients as defined in the rules of the Financial Conduct Authority. Any person who is not a relevant person should not act or rely on this document or any of its contents. All information referred to in the present document is available on
www.bnpparibas-am.com. As at February 2021.
March 2021 portfolio institutional roundtable: Responsible investing 17
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