The Covid crisis has slowed down many things, but the move to a low carbon world is not one of them. In the face of another existential crisis in the making, governments have been legislating and companies adapting throughout the world.
This is creating hugely beneficial tailwinds for companies which are either aligned to or are enabling the energy transition to a low carbon, ‘clean’ energy world. In order to limit global temperature increases to the current target of 1.5 – 2 degrees, governments and policymakers have started to realise that we essentially need to drastically reduce our carbon dioxide emissions and revolutionise our current energy infrastructure. Thus, we have started to see a marked shift in governmental approach, with the increasingly widespread introduction of emissions targets, ‘green’ energy policies and financial commitments.
A change in attitude and actions which has also been seen at both a corporate level and in the lives of individuals, with companies and people seeking to adapt their energy usage and limit emissions outputs. However, as this is an evolution still very much in its infancy, it will also be the catalyst for extensive structural growth across the entire global energy infrastructure, as well as numerous investment opportunities.
The Positive Pennine portfolios have recently invested in a fund which strives to take advantage of these opportunities – the Schroder Global Energy Transition Fund. The investment philosophy applied to the fund is broad based in its nature and aims to capture the serious growth potential of this market, driven by the aforementioned shift in global policies and approach. Indeed, its five investment themes of renewable energy equipment, renewable energy generation, transmission and distribution, energy storage, hydrogen and other applications and electrical equipment and services, give the fund exposure to every stage of the energy transition.
This reflects the fact that many different types of company will be part of the energy transition – not just clean energy generators. Some of these might be classified as ‘enabling infrastructure’, especially relating to electrical equipment and services. This theme starts with the manufacture of more efficient and effective equipment for the production of non-renewable energy, and ends with the companies providing the everyday, end user infrastructure, such as charging points of electric vehicles.
The managers also apply an exclusions screen, which enables the fund to avoid areas of the market and companies which do not align with the intentionality of the approach, with, as one would expect, particular focus being placed on excluding companies associated with fossil fuels or which are negatively contributing to the environment.
Moreover, the manager and his colleagues strive to invest in companies which clearly demonstrate responsible business practices. They will also actively engage with these companies to not only ensure that these standards are maintained, but also to encourage them to play an even bigger role in helping to enable the energy transition.
This is a highly exciting investment area which has long been talked about, but is only just starting to bear the fruits of its potential and the Schroder Global Energy Transition Fund aims to capture this growth.
For more information about how you can choose pensions and investments with a social and environmental conscience, have a look at our website www.positivepennine.co.uk.
Positive Pennine is a trading style of Pennine Wealth Solutions LLP, which is authorised and regulated by the Financial Conduct Authority and is only available through authorised Financial Advisers.
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