Energy is a key resource which, with circa 2bn more people predicted to be on the planet by 2050, will need significant investment if we are to provide adequate provision for our burgeoning global population.
Allied to the expected surge in demand there is heightened awareness of the pressing need to move away from fossil fuel energy sources as part of the drive to reduce CO2 and mitigate against the ever-increasing impact of climate change on the planet. Too many global asset owners continue to be under invested in clean energy companies - they are over invested in the past and under invested in the future.
Five long term, indisputable megatrends
- Inadequate supply of clean and renewable energy, critical for tackling climate change: oil and gas reserves are due to run out within the next 50 years
- Increasing demand for clean, renewable energy driven by population growth, industrialisation and urbanisation: in 41 countries, less than 50% of the population has access to electricity
- Increasing regulation and government support: in addition to increased regulation and supportive government policies, global corporates are transitioning to a low carbon and energy-efficient economy with pro-active energy strategies
- Increasing investment in energy infrastructure: an estimated $22trn is needed to address urgent global requirements
- Increasing investment in technology to increase efficiency and assure quality
The supply/demand imbalance will drive significant investment in energy solutions over the next two decades, in which technology and infrastructure in areas such as smart grid, LED, battery storage, power transmission and metering will play a major role.
Addressing this challenge over the coming decades has obvious environmental and social benefits. In terms of directly measuring these benefits, ie, the impact of investing in these companies, KBIGI has carried out an in-depth analysis, using the United Nations Sustainable Development Goals as a proxy. This highly innovative tool - Revenue Aligned SDG Score, or RASS - shows that in excess of 77% of revenues of the KBIGI Energy Solutions Strategy are contributing to the achievement of the SDGs.
Treasa Ni Chonghaile is senior portfolio manager on the KBIGI Energy Solutions Strategy