Responsible Investment Quarterly Q3 2022

Responsible Investment Quarterly Q3 2022

The third quarter of this year continues to be dominated by the implications of the energy crisis, but there was also a significant new development in the US, with Congress passing the Inflation Reduction Act (IRA). We believe both these events will accelerate the uptake of renewables and accelerate decarbonisation over the next decade.
The IRA is arguably the most ambitious and comprehensive climate legislation the US has ever seen. As analysed by Natalia Luna in one of this quarter’s articles, the Act is a very important catalyst for increased investments in clean energy such as renewables, hydrogen and carbon capture and storage (CCS). Within the US it has the potential to double the speed of decarbonisation over the next decade at the same time as leapfrogging the US to become one of the global leaders in green technology.
The energy crisis remains top of the agenda in the European Union and countries accelerated their responses to prepare for a winter without reliance on Russian gas, after the suspension of Nord Stream 1 in September1. The EU announced a set of emergency measures to cut power use and redirect windfall profits of energy companies to households and businesses to shield them from power prices that are multiples of long-term averages. Against this backdrop we believe energy efficiency investments will become a much more visible part of the solution for consumers and industrial energy users, so companies in this space will benefit from increased demand.
In response to gas shortages we have seen coal usage spike in the short term, however the use of renewables is also accelerating. In a recent report BloombergNEF highlighted the record increase in renewables additions, with 75% of the power capacity added in 2021 being renewables, and of this 50% was solar2, which is a trend that we expect to continue. This increasing future supply of clean renewable energy and very high gas prices improve the relative attraction of green hydrogen. Jess Williams and Natalia give an update on the progress and catalysts for the development of green hydrogen in this edition.
Finally, an area that doesn’t get as much attention as we think it should is the sustainable food transition. Previously, food prices were increasing due to conflict, climate change and Covid. This has now been exacerbated by war, trade disruption and energy prices, increasing the risks of social and political disruption in countries dependent on food and fertiliser imports, and worsening inequality in developed markets. This issue, Olivia Watson writes about the importance of a sustainable food transition and the investment risks and opportunities this brings, with a particular focus on food waste, one of the biggest levers to improve the efficiency of the global food system and an area that is sure to get more attention in view of rising food prices.

RI Research Team philosophy: Educate, Collaborate, Engage​

We believe responsible investment (RI) research is fundamental research, so our RI analysts are embedded within the global research team. The team’s philosophy reflects this integration with its mantra: “Educate, Collaborate, Engage”.

Our RI analysts educate portfolio managers and fundamental industry analysts on RI themes and developments based on our intense research in three overarching sustainability themes: climate transition, energy transition, and food and materials transition. We then collaborate with our portfolio managers and industry specialists to highlight risks and opportunities within industries and sectors. Through this collaboration we identify companies we want to engage with on the risks and opportunities we have identified linked to that particular RI theme. Finally, we integrate these learnings into our investment selections and decisions.

This approach allows us to support and provide actionable investment insights. Our overarching sustainability themes are linked to the UN Sustainable Development Goals, which we believe increasingly shape the economic and investment landscape, and our RI thematic research focuses on investment-relevant sub-themes within these.

Our RI themes and sub-themes

Responsible Investment Quarterly Q3 2022

We hope you enjoy reading our analysts’ viewpoints.

15 November 2022
Roger Wilkinson
Head of EMEA Equity and Responsible Investment Research
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Responsible Investment Quarterly Q3 2022


2 Credit Suisse, US Inflation Act, a tipping point in climate action, 2022

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