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From New Delhi to Bengaluru, India is home to some of the most polluted urban centres in the world. But this year, its skies turned clear and blue for the first time in decades after the coronavirus lockdown shut factories, grounded flights and removed cars and trucks from the roads. As residents across the country breathed clean air and spotted stars at night, those in the northern state of Punjab could see the Himalayan mountain range more than 100 miles away.
The sudden halt in economic activity has drastically cut pollutant emissions and shrunk humanity’s ecological footprint. But it requires a fundamental shift in our economic structures to build a more sustainable post-pandemic world.
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New environmental equities
For investors, the opportunity to bring about change has never been greater. With governments and businesses responding to pressure to contain ecological degradation, a distinct and attractive group of environmental-equity investments has emerged.
These are companies that combine strong environmental credentials with innovative products and services designed to safeguard the world’s natural resources. The environmental-product industry is one of the world’s most dynamic: already a $2.5trn market, it is expected to grow by an annual 6%-7% over the next few years. The Global Environmental Opportunities Fund focuses exclusively on this sector. Central to our strategy is a ground-breaking scientific framework called Planetary Boundaries. This is a model, developed in 2009 by scientists at the Stockholm Resilience Centre, identifying nine factors – including carbon emissions (climate change), biodiversity, fresh water and land use – crucial to maintaining the stable biosphere required for human development and prosperity.
The most promising subsectors
We use this framework to identify firms with the strongest environmental credentials across their entire value chain – from the extraction of raw materials to manufacturing processes, distribution and transport, product use, and disposal and recycling.
One particularly promising subsector is environmental testing. Companies that provide tools for air, water, soil and food quality measurement comprise a $5bn market growing strongly in emerging economies. Strong performers in this area include Thermo Fisher Scientific (NYSE: TMO), a leading manufacturer of laboratory equipment and scientific instruments for the healthcare and environmental markets.
Using resources responsibly
Resource efficiency is another key theme: companies operating in simulation and advanced industrial design and engineering solutions, such as Ansys (Nasdaq: ANSS) and Autodesk (Nasdaq: ADSK), help the planet use its limited resources responsibly. Ansys is a leader in industrial-simulation and design software. Autodesk specialises in computer-aided design software, with a particular emphasis on applications for architecture and engineering.
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Should you buy an active ETF?ETFs are often mischaracterised as passive products, but they can be a convenient way to add active management to your portfolio
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Power up your pension before 5 April – easy ways to save before the tax year endWith the end of the tax year looming, pension savers currently have a window to review and maximise what’s going into their retirement funds – we look at how
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Three key winners from the AI boom and beyondJames Harries of the Trojan Global Income Fund picks three promising stocks that transcend the hype of the AI boom
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RTX Corporation is a strong player in a growth marketRTX Corporation’s order backlog means investors can look forward to years of rising profits
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Profit from MSCI – the backbone of financeAs an index provider, MSCI is a key part of the global financial system. Its shares look cheap
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'AI is the real deal – it will change our world in more ways than we can imagine'Interview Rob Arnott of Research Affiliates talks to Andrew Van Sickle about the AI bubble, the impact of tariffs on inflation and the outlook for gold and China
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Should investors join the rush for venture-capital trusts?Opinion Investors hoping to buy into venture-capital trusts before the end of the tax year may need to move quickly, says David Prosser
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Food and drinks giants seek an image makeover – here's what they're doingThe global food and drink industry is having to change pace to retain its famous appeal for defensive investors. Who will be the winners?
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Barings Emerging Europe trust bounces back from Russia woesBarings Emerging Europe trust has added the Middle East and Africa to its mandate, delivering a strong recovery, says Max King
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How a dovish Federal Reserve could affect youTrump’s pick for the US Federal Reserve is not so much of a yes-man as his rival, but interest rates will still come down quickly, says Cris Sholto Heaton
