The growing number of impact investors in the sector is filling a gap left by traditional investors. The comments below by industry expert look at the biggest challenges facing the environment that we thought would be ideal for EU Green Week.
Hilde Jenssen, fundamental equities product manager at Nordea Asset Management
"Plastic pollution is a global problem and affects the entire value chain, from manufacturer to waste manager. Since 1992, China has absorbed an estimated 45% of the world's plastic waste. However, it announced last year it no longer wanted to serve as the world's waste receptacle. This was a wakeup call for the EU, stating its own target that all plastic packaging should be recyclable or reusable by 2030.
For investors, investing in companies providing alternatives to plastics, such as renewable packaging firms, is one way of reducing plastic pollution. This is currently represented by Tomra, BillerudKorsnaas and WestRock in our Nordea 1 - Global Climate and Environment Fund. Recycling plastics is a megatrend which is likely to endure. To be sure, this will produce winners and losers, separating those companies with a sustainable business strategy from those without. As active investors, it is our job to invest in companies that understand the difference."
Neville White, head of responsible investment policy and research at EdenTree Investment Management
"Explosive population growth, quickening climate change and entrenched developmental disparity have emerged as the pressing challenges facing humanity and the resources it relies on. Yet, the full implications of these rapidly changing global dynamics are still neither fully understood nor being properly addressed. The food supply chain is one of the areas most acutely affected by this shift.
There are several issues when it comes to supplying adequate food production. Firstly, the rise of the middle-class has taken labourers away from farmland and into new forms of employment. Secondly, the growing urbanisation of arable land has reduced space available for agriculture. Finally, agriculture is the greatest user of water, yet some countries has less ability to irrigate where rainfall is lower.
EdenTree analysed investments within mechanisation, that are helping to improve sustainability. John Deere is an iconic US manufacturer of agricultural equipment. The core investment themes include doubling agriculture output by 2050, and the company harness smart technology and digital solutions for the meeting of traditional farming with precision instrumentation."
Ben McEwen, climate active analyst at Sarasin & Partners
"Climate change is one of the most complex issues facing society today, spanning, scientific, economic, social and political aspects, as well as incorporating moral and ethical questions.
Given climate change's global nature and multifaceted impacts, our investment approach must be correspondingly multidimensional. Therefore, we aim to take account of both global and regional economic and physical impacts, considering as to how climate change might disrupt existing business models and provide new investment opportunities.
Given the magnitude and breadth of the transformation that climate change both implies and demands of our economic system, a significant component of our climate work is to apply an active filter to companies outside of these trends. As such, we consider how climate change might alter the prevailing risk and return profiles of all industries and companies analysed, specifically through interrogating the physical, transition and liability risks faced.
If we are to meet the goals set out by the Paris Climate Agreement, the global economy needs to be transformed. This transition will simultaneously disrupt existing industries, while presenting innovative investment opportunities, trends we believe can be best anticipated through a thematic approach to analysis."