Expert: Ben Palmer, Lead Sustainable Portfolio Manager, LGT Wealth Management UK Facilitator: Roderic Rennison, Partner, Catalyst Partners
Headlines:
- Defining the green agenda as encompassing energy transition, resource management, biodiversity, pollution, and sustainable food systems
- The political and social factors of the green agenda with focus on political resistance, costs of action vs. inaction, and public support for green policies
- The economic case for green investment highlighted, noting estimates that the cost of inaction could be five times greater than a 1.5°C investment scenario
- The social implications of climate inaction, including risks of mass migration and increased inequality
- Recent underperformance of sustainable portfolios, with emphasis on the need to reframe sustainable investing to reflect new economic realities
- Debates on sustainable investing included the potential inclusion of industries like defence in sustainable portfolios
- The importance of government policy and regulation in tackling water management, nuclear energy, and other renewable energy sources
- Generational differences in climate attitudes and cognitive dissonance between stated environmental beliefs and actual behaviours highlighted
- Key data points, including $166 trillion investment needed for 1.5°C by 2050, $1,266 trillion cost of inaction, soil depletion estimates, and Nigeria’s projected share of global births by 2050
Discussion points:
Defining the green agenda
The green agenda encompasses the energy transition away from fossil fuels towards renewables, efficient resource usage and waste management, biodiversity conservation, pollution reduction, and addressing challenges in the food system. These issues are interconnected and require a holistic approach.
Political dimension
The political debate around the green agenda has become more nuanced, with some politicians pushing back against ambitious targets. The pushback is driven by concerns about competitiveness, national security, and the perceived high cost of transitioning. However, there has been significant progress, with 90% of global GDP now covered by net-zero commitments from governments.
Economic dimension
The economic argument for the green agenda is compelling, as the cost of inaction is estimated to be five times higher than the investment required for a 1.5°C scenario. Inaction could lead to mass migration, increased inequalities, and significant economic disruption. The transition to a sustainable economy is seen as crucial for long-term growth and resilience.
Social Dimension
Public opinion generally supports governments acting on the green agenda, although there are variations across regions and age groups. The discussion touched on the generational divide, cognitive dissonance between beliefs and actions, and the need for economic incentives and behaviour change.
Sustainable investing
The discussion explored the recent underperformance of sustainable investing portfolios, potential reasons behind it, and the need to reframe sustainable investing to recognise the new landscape. The inclusion of industries like defence in sustainable funds was debated, as well as the role of government policy and regulation in driving change.
Water infrastructure and management
The challenges of aging water infrastructure, the lack of investment, and the need for higher water bills to fund necessary upgrades were discussed. The potential for water scarcity and the importance of efficient water management was also highlighted.
Energy sources and transition
The discussion covered the potential of nuclear energy, including micro-reactors and fusion, as well as other renewable sources like geothermal and tidal power. The rapid scaling of wind and solar energy was noted, as well as the need for energy storage solutions like batteries.
Key takeaways:
- Invest in companies providing solutions to address the five areas of the green agenda: energy transition, resource usage, biodiversity, pollution, and food systems
- Support government policies and regulations that incentivise sustainable practices and behaviour change
- Advocate for increased investment in water infrastructure upgrades and efficient water management systems
- Explore investment opportunities in renewable energy sources, including wind, solar, geothermal, and advanced nuclear technologies
- Encourage the development and adoption of energy storage solutions to address intermittency challenges
- Promote public awareness and education campaigns to address cognitive dissonance and align beliefs with actions
- Support initiatives that provide economic incentives for sustainable behaviour, such as deposit-return schemes and carbon pricing
- Invest in companies focused on building healthier societies and cleaner economies, particularly in healthcare and energy transition sectors
