Russia-Ukraine war has only resulted in a short detour on the path to net zero emissions and companies that are expanding their carbon-free power generation capacities, offering electricity-storage technologies, firms accelerating building efficiency to reduce energy consumption etc remain attractive long term investment options, says the latest edition of global financial services provider Credit Suisse’s “Supertrends 2023 Investing Reimagined” report.
“Western governments’ pursuit of energy security is leading to an unprecedented push for the build-out of domestically produced renewable (i.e., wind and solar) energy. The U.S. is leading the green spending charge with its Inflation Reduction Act. In the European Union, the new Green Deal Industrial Plan will complement the REPowerEU plan, while China is developing mega-sized renewable centers”, the report released on Tuesday said.
According to Credit Suisse, companies leading the energy transition by moving away from traditional fossil-fuel business toward renewable, firms involved in blue and green hydrogen capacity enhancements, companies providing technologies to improve sustainable food production (i.e., precision agriculture, vertical farming technology, gene editing, waste management and food waste reduction), meat processors with low greenhouse gas emissions and plant based food product providers, all hold tremendous investment potential.
The other companies that needs to be watched out within the broad “Climate Change” supertrend identified by Credit Suisse include automotive companies with a strong commitment to improve their environmental footprint (such as electric vehicles, sustainable fuels, hydrogen or other technologies) and firms focusing on sustainable metals and mining capabilities ensuring the supply chain adaption to lead the energy transition.
In addition to climate change, the report covers five other supertrends namely infrastructure, technology, silver economy (investing for population aging), millennials values and anxious society (inclusive capitalism).
“The 2020s have already ushered in a lot of changes in our world, many of which we have captured in our Supertrends long-term equity investment themes. While these trends were just starting to emerge when we first launched the Supertrends in 2017, they are now growing and evolving into something much more impactful,” said Nannette Hechler-Fayd’herbe, Head of Global Economics and Research at Credit Suisse.
The report said that while the companies that come within Credit Suisse’s Supertrends umbrella were also impacted by the downtrend, its diversification approach across all six Supertrends and their various subthemes helped navigate the turbulent markets.
“While the Supertrends could not escape the downtrend in financial markets in 2022, we retain our overall conviction across the Supertrends and their subthemes. We believe the Supertrends continue to offer value in terms of diversification and growth opportunities by focusing on themes that transcend business cycles and will ultimately shape the future”, Burkhard Varnholt, Global Chief Investment Officer at Credit Suisse, said.