Investing in the climate change agenda The urgent hunt for solutions to the climate crisis, where Clean and renewable energy new, increasingly investable industries are disrupting old Sharp falls in the cost of generating wind, solar and other economy stalwarts, makes climate transition a lasting and renewable energies (not to mention nuclear), allied with powerful investment theme for 2022 and beyond. judicious use of government subsidies, have transformed We are not climate scientists or policy makers, and we make the competitiveness of green alternatives to carbon-based no specific predictions here about the future path of the power. This is a trend reinforced by burgeoning concerns climate emergency. We are simply seeking to identify where over air quality in fast-growing and huge emerging value is being created for our clients. markets like India, China and Nigeria. Read our blog at The background canaccordgenuity.com/investing-in-renewable-energy/ to find out more. COP26 in Glasgow was meant to check in on progress Sustainable food production towards the climate change targets set in previous Methane emissions from cows, alongside deforestation conferences, and to keep countries on track in meeting linked to intensive soybean cultivation, are powerful those targets. additives to the greenhouse effect. With more efficient Signed by 180 countries, the earlier Paris Agreement sought plant biotechnology and enormous productivity and to reduce greenhouse gas emissions and limit the global waste management improvements from farm to fork, temperature increase to below 2°C above pre-industrial there is a real prospect of making inroads into this large levels by the year 2100. Ideally, the increases should be kept contributor to global warming. Discover more at to 1.5°C or below. canaccordgenuity.com/investing-in-sustainable- Before the commitments made in Glasgow, base case food-systems/. estimates had global temperatures rising to 2.8°C above Electric vehicles pre-industrial levels, despite all the work done over the In transport, advances in battery technology, software and preceding six years. Even after all the pledges at Glasgow, on power management semiconductors now mean that it is a good outcome we might be looking at 2°C as the base case not just automobiles that are decarbonising, but also trucks, – which is not a good outcome. railways, marine transport and even aeroplanes. Consumer The vast majority of damage to our climate has happened demand is soaring and electric vehicle infrastructure since 1972, when the world’s population was around 3.7 is proliferating, making this a compelling investment billion. Today it is around 7.9 billion, an increase of 114%. theme for 2022 and beyond. Find out why in our blog at At the same time, average real GDP per head has canaccordgenuity.com/investing-in-electric-vehicles/. increased significantly. Combined, energy production, food production and So we have seen a population explosion and have made transport cause nearly two-thirds of greenhouse gas ourselves richer too – and that means making more stuff, emissions. In each case, what makes them particularly which means burning more coal and oil, and creating more timely as investment themes is the rapid development methane. In 1970 global crude oil production was around 40 of technology that replaces traditional, carbon-heavy million barrels per day. Now, without COVID-19, it would be industries with more climate-friendly businesses that could around 100 million barrels per day. generate potentially strong cash flows. Today, of the five or six major sources of greenhouse At the same time, the cost of doing business is set to rise gases, energy production contributes 25%; food, for carbon-intensive industries such as coal mining or oil agriculture and forestry 24%; general industry 21% and production. Many large institutional investors are already transport 14%. Each of these areas is under huge pressure excluding them from portfolios, while banks are withdrawing to reduce their outputs. from financing their activities. Within our climate transition theme, we are looking at We see our three themes as a positive approach to sectors where a combination of rapid technological investing that in the longer term will align good client improvements, cost-effectiveness and increased outcomes with a sustainable future for our planet, our regulation has created a compelling investment case. children and their children. You can read more about these topics at: canaccordgenuity. com/investing-in-climate-change/. Investment themes 2022 3