We wanted to share an update from IMPAX Asset Management, a thought leader in the sustainable investment industry. Blue Summit has worked with IMPAX (previously Pax World) since the mid-1990s. They are an important partner in our goal to align client investments with their values. Below is a summary of key themes that may shape opportunities in sustainable investing for 2024 and beyond.
As we step into 2024, the transition to a more sustainable economy remains resilient and promising. Here are key insights and opportunities for the upcoming year:
1. Resilience of the Sustainable Transition
Overarching drivers like changing technology, consumer preferences, societal shifts, and policy/regulation continue to bolster sustainability-focused businesses
Despite challenges such as rising interest rates, the energy transition, and broader sustainability efforts, prove their resilience. Interest rates have likely topped out and as they come down, will increase capital flow.
2. Political Dynamics Unveiling Opportunities
Tensions between the US and China drive tighter export controls, leading to opportunities in US supply chains and strategic sectors.
Strategic investments in chip fabrication plants, amounting to billions, present a fan-out of opportunities and capital flow in the US.
The IRA (Inflation Reduction Act) has been and will be a tailwind to environmental tech and service businesses. It has already directed more than $250 billion in this direction.
3. Mitigating Biodiversity Loss as a Market Driver
Biodiversity gains prominence as a metric to anchor commitments and drive corporate progress, similar to carbon neutrality over the past decade. Estimates suggest its influence on over half of global GDP.
Opportunities arise in circular solutions (such as water treatment, materials recycling, and aquaculture) as long-term strategies to combat biodiversity loss.
4. Innovation Addressing Societal Challenges
Private sector innovation becomes crucial in addressing challenges like aging populations and enhancing societal well-being.
Companies fostering inclusivity, education, and quality of life are poised for long-term growth, irrespective of economic cycles.
5. AI as an Accelerator of Sustainability
Artificial Intelligence emerges as a transformative force, impacting all sectors to increase efficiency.
AI can accelerate and optimize environmental outcomes with more immediate information processing and responsiveness.
In the long run, we believe companies aligned with sustainability are poised for growth, offering products and services that are placed where the world is going. As we progress into 2024, embracing these opportunities will be pivotal for navigating the evolving landscape of a sustainable economy.
If you would like to dive deeper into these topics, send us a note to join our Insider Series for in-depth SRI updates
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Blue Summit does not directly engage with companies listed above. Many, but not all clients, are invested in funds that perform this advocacy.