Investing in the transitions changing our world

We are in a time of great global change where powerful megatrends are reshaping our society and the global economy.

Jens Peers, CIO of Mirova US and portfolio manager of the Mirova Global Sustainable Equity Strategy, believes that investing in these secular megatrends, or transitions, could be a powerful driver of investment returns over the long term. Those four key transitions being: demographic, technological, environmental and governance.

Listen to the full podcast in which Jens joins Louise Watson to delve into the dynamic landscape of investment opportunities emerging from these global transitions:

• How he is playing the AI theme as its adoption continues apace
• How the tech bubble of the early 2000’s compares with today
• Opportunities, and risks, in the energy transition
• The generational divide in consumer needs and preferences
• The rise of the middle class in emerging markets
• Geopolitical trends, and one policy on which Jens agrees with Trump
  
• The one long-term theme that isn’t yet in the portfolio which he finds most exciting

Podcast recorded on 23 September, 2025.

Lightly edited transcript

Louise Watson (LW): Hello and welcome to Navigating the Noise, a podcast by Natixis Investment Managers, where we bring you insights from our global collective of experts to help you make better investment decisions. I'm Louise Watson, and today I'll be joined by Jens Peers. Jens is the CIO of Mirova US and Portfolio Manager of Mirova's Global Sustainable Equity Strategy. Jens is also a true global citizen. He's from Belgium but lives and works in the US and visits other areas of the world to meet companies and investors. We're looking forward to welcoming him back to Australia in October.

Jens, welcome! Great to chat to you again. We're just coming out of the Northern Hemisphere summer, and I understand it was very hot in many parts of Europe. How did you spend your summer, and how did you manage to escape that heat?

Jens Peers (JP): Hi, Louise. Thanks for having me. So, it was really hot in Europe, but luckily, I spent most of my summer in the US. It's always warm here as well. But I'm just back from a few days— we love camping. I put a camper on the ferry to Martha's Vineyard and spent a few days there cycling around. That really helps deal with the heat.

LW: Awesome. That sounds like a great way to spend summer. Now, let's get right into the portfolio. You describe your global equity investing strategy as multi-thematic. It is centred on four big megatrends—long-term structural changes to the world. Can you briefly tell us about these four trends?

JP: And you're right. We create our portfolios around four key transitions - transitioning from where we are today to where we will be in the next decade or few decades. Those transitions are very much aligned with what the World Economic Forum has also seen as the big longer-term trends. They're centred around demographic changes and transitions, which we need to adapt to in terms of how the world will look from a demographic point of view. Then there are technological, environmental, and governance transitions - how you organise a broader economy, which will also change gradually over the next few decades. We invest along those key transitions in the portfolio.

LW: And roughly what percentage of your portfolio is invested in each megatrend at the moment? Do you have set limits or targets for each?

JP: We don't really have set targets. We create the portfolio from the bottom up, based on stock opportunities and valuation opportunities from these stocks as well. So, the breakdown of our portfolio along those megatrends is really dependent on how we see those opportunities, and no surprise that over time that has changed. While we were a lot more focused on environmental factors, let's say about ten years ago, we're now a lot more biased towards technology. Technology as a transition and the companies that offer solutions there roughly represent about 45% of the portfolio today. That's followed by the environmental transition, mainly companies dealing with energy and resources like water, which is about a bit under 30% today. The demographic transition is around 20%, and then governance and cultural transitions make up just over 5% today.

It has to be said that some companies obviously contribute to and benefit from multiple trends. For instance, under that governance trend, dealing with diversity is very important, and companies like NVIDIA, which we obviously play as a function of that technological transition towards a world with more AI applications, have also come on our radar because of their strong diversity policies. A lot of these companies play multiple themes at the same time. But, you know, technology followed by environmental, then demographic trends, and then governance— that's what we have today in terms of weight.

LW: Technology, particularly AI, has been the hottest investment theme of recent times. There are concerns about overinflated valuations, though, and comparisons to booms and busts of the past, like the tech wreck of the early 2000s. How exposed are you to the tech sector, and how do you manage the risks of investing in tech, robotics, and AI alongside all these exciting opportunities?

JP: It is true that there are many similarities today, specifically given the outperformance of mainly the AI names in the past couple of months - many similarities to the dot-com crisis. Ultimately, that turned out to be a bubble that burst. But don't forget that the Internet really drove big changes in our economy, and even throughout that bubble back in those days, the most important companies today and the best performances over the last 20 years were actually found in companies with exposure to that theme.

In terms of the boom and bust after that, we see many similarities. The market was back then and certainly is today very concentrated in terms of the highest weights of individual companies and themes and sectors, like tech. Right now, valuations of many of those AI names, specifically a lot of startups, are very high, and expectations are huge as well. The timing, even if AI is really changing our world significantly, as we do expect, is also dependent on many other things that need to be done, like investing in better energy infrastructure, getting access to water, etc.

We've seen the same happening about 25 years ago, where there was a boom first, followed by a bit of a bust. There are also differences. The main companies active in this space now, compared to 25 years ago during the dot-com crisis, are very well capitalised. They have strong balance sheets, generate a lot of cash flow, and continue to invest significantly in this area, mainly through the creation of that free cash flow. That should create a bit of a buffer on that valuation.

But it's true that these AI companies have outperformed the other part of the technology industry, and specifically, we believe software companies today are very attractive after a strong underperformance versus those AI companies and the semiconductor companies that also benefit from AI.  The performance gap and the valuation gap between software companies and the market - those companies that the market thinks might actually suffer from AI and face competition from AI - are at a very high level. So, in our portfolio, we have some exposure to some of those semiconductor names, like NVIDIA and Taiwan Semiconductor, but we also have software companies in the portfolio, like Salesforce, where we see a lot more valuation opportunities, and there's certainly no question about bubble valuation.

LW: AI is very closely tied to cloud computing, and we've seen huge profits and growth in cloud computing in recent months. How far into that move to cloud computing do you think we are?

JP: You know, AI depends a lot on data, and the way that the data models or the AI models work depends heavily on access to the data in the cloud as well. Roughly around 50% to 60% of all the data in the world today is stored in the cloud already. 

We've seen that this requires a lot more investments in data centres— not just for learning but also for storing the data as well. There's still a lot of opportunities in this space.

LW: Technology is a resource-intensive sector, and there's been a lot of talk regarding the consumption of energy and water by AI and data centres. Do you believe that AI can grow in a sustainable way, and are there investment opportunities tied to that?

JP: It can be challenging. AI, as you said, requires a lot of electricity to run the data centres and a lot of water to cool down the data centres. There are new and better technologies on the way to cool down the data centres, which is quite exciting. On the power side, apart from the fact that GPUs and computer chips in general are a lot more energy efficient today for the same outputs than they were even last quarter or last year or the last decade, because they're so much more efficient and better, we use a lot more of those semiconductors today, and therefore power demand is going up.

So in the US, for instance, over the last 20 years, we've seen pretty much flat growth in power demand. For the next two to three decades, this is now expected to be somewhere around 2% to 3% annualised over that period. We have an expected massive increase in demand for power. That power will come from a mix of power generation sources as well. If you want to do it sustainably, but also if you want to do it quickly (and it's not necessarily just tied to sustainability), then wind and solar are certainly the quickest to deploy and are very important potential beneficiaries of this. Other low-carbon energy sources, like nuclear, are also being mentioned a lot. So, we expect some exciting opportunities there.

LW: And Australia's recently announced targets of reducing emissions by 62% to 70% below 2005 levels by 2035. While this is slower than some countries are targeting, it's a move in contrast to so many countries in the world right now, particularly the US.

Many governments around the world are following President Trump's outspoken stance against combating climate change. Do you believe this is a short-term change or a long-term shift? Are you taking it into consideration in your investments, and is this creating investment opportunities for you?

JP: I think there are short-term effects and long-term effects. In the short term, there's a lot of noise around renewable energy projects. Specifically in the US, offshore wind is under a lot of pressure. One day these projects are cancelled by President Trump, and two to three days later some lawyer decides that he went too far and can't do it, and then it's back online. So it creates a lot of uncertainty, and that's obviously something we need to take into account when looking at valuations.

At the same time, as I mentioned earlier, we're going to have a lot more demands for energy, and we need to invest in more energy generation. The quickest way to do that is by investing in solar and utility-scale solar—it takes about 18 months to fully build a solar farm. Coal and gas can take seven years, and a nuclear plant can easily take 15 years before new capacity is added. So, we see a lot of noise—headline risks potentially—around that. But in reality, there's still a lot of demand and support for those technologies and for that infrastructure. Regions in the world, including Australia and the European Union, are still very supportive of renewable energy. That will probably offset some of the short-term noise that you see in the US.

LW: You've talked about the investment opportunities in the water value chain. Can you explain what that is and why it excites you?

JP: Well, water is a resource that we need for everything we do. To survive, humans obviously need to drink it. But also, in production processes, in our day-to-day life, like irrigation for our food, washing our cars, etc. The water cycle encompasses anything from pumping up water, treating it, and delivering it to whoever needs it, to collecting wastewater and returning it back to nature. There are plenty of opportunities.

Depending on the application, you need different levels of water purity. For instance, for semiconductors, you need ultra-pure water that has almost no polluting particles in it at all. For irrigation, that's a different level of purity. So for each of those, we see a lot more opportunities as well.

Through industrialisation and the way we live, we deal with a lot of dirty and polluted wastewater, and we are becoming more aware of the impact of many of these contaminants as well. PFAS and PFOS—permanent chemicals that we find in water—are a huge threat to our food and water and also to land quality. We see more and more regulation happening in this space to treat that and so, we see many opportunities in water treatment. As I mentioned earlier, even AI requires a lot of water to cool down the data centres and servers. For normal water delivery and utilities, we expect significant growth coming from that part of the industry.

LW: We had a guest on this podcast a while ago who highlighted how accurately demographic changes can be calculated many decades into the future as changes to birth and death rates happen very slowly. An investment opportunity related to demographics, which I hadn't thought of, is changing consumer preferences.  Along with generational changes, particularly health and wellness, can you tell us how much this area is growing and how demand differs among different generations?

JP: Well, I think it's not just different generations. We have an ageing population and a younger generation. Millennials and Gen Z are big groups as well. They have different preferences, and older people just need different types of products. Even simple things like reading glasses and hearing devices are in demand for older people, which isn't the case for younger generations.

We're talking about different preferences positively and negatively. For instance, if you look at millennials and Gen Z, this is one of the first generations that smoke a lot less and drink a lot less alcohol. But that also means there are opportunities, such as demand for mocktails and alcohol-free drinks in general, which is going up exponentially.

Equally, your younger generations, driven by better education and research, are also more aware of the negative impact of ultra-processed food. That means there will be a lot more demand for natural ingredients for food, for instance. Healthier living in general presents lots of opportunities along the value chains.

LW: Another demographic change you highlight is the growing middle class in emerging markets, where around two-thirds of the global population lives. Which industry sectors or sub-sectors do you see the biggest opportunities in?

JP: Despite what many people think, it's not always about consumption and specifically not about luxury. For many middle-class families in emerging countries, an iPhone—or, let alone, two or three iPhones for the family—is not affordable. Still, the middle class in Australia is not the same in terms of income level as the middle class in many of these emerging countries.

It's really about access to basic financial services. It's also about getting better infrastructure because that middle class tends to live in cities. Building out those cities requires a completely different way of dealing with energy and water, as well as waste management in those countries. So, those are a few areas we focus on when we think about the rising middle class in emerging countries.

LW: And we've just started the largest intergenerational wealth transfer in history as rich baby boomers pass on their money and assets to their children and grandchildren. Is this an investment opportunity for you as well? If so, how are you taking advantage of it?

JP: It is maybe a little bit more tangential in our portfolio, but we see shifts in wealth management as well. As I mentioned earlier, the younger generations are more aware of sustainability, which translates into healthy living but also into how they invest. Sustainability becomes much more important for their portfolios as well, and obviously that's an area where we are very strongly focusing.

LW: Governance sounds like a very dry investment theme, but it ties into global geopolitics, which is a fascinating, volatile, and dynamic area right now. Such a high level of change must be creating investment opportunities, but it must also be a difficult area to predict. What are the long-term thematics tied to these changes that you think are the most certain and therefore most investable?

JP: A difficult topic from a sustainability point of view could be defence, because it's not just about how geopolitics are positively impacting our role—there's a lot of war risk in the world as well. A lot of debate is happening, specifically in Europe, around defence. Even for us as sustainable investors, there are a few opportunities for companies that are active in this space, specifically in cybersecurity. We've seen just recently a couple of days ago where a lot of airports around the world were closed because of a cyber-attack—that's also an area of huge opportunity.

Another aspect of geopolitical tensions is that we're moving away from a globalised world to focus on the local economy and reshoring and friend-shoring. There are also opportunities related to redesigning supply chains to bring them more local, including transportation. Again, energy, water, and all those areas are key, but also companies that help smaller local companies grow their business, through software that assist them with local taxes, tariffs, etc. Companies like Shopify and others that help in this way also have an opportunity because of this theme.

LW: Donald Trump recently announced that he'd like to do away with regulations requiring US companies to disclose their financials every quarter. This is the latest in a string of announcements to reduce the regulatory burden on companies, but which also appears to be giving more power to company management and away from shareholders. What do you think of the idea of getting rid of quarterly reporting and these latest changes to governance for US companies?

JP: Like with any politician, or any President, I agree and disagree with a few of their points. Now this is one where I tend to agree a little bit more. On one hand, that probably means a little bit less immediate information available for us as investors.

At the same time, because of this quarterly publication pressure, there's a lot more short-termism both with investors and companies alike. I think moving away from this quarterly pressure would only be a good thing for long-term investors. It would also help CEOs and CFOs of these companies to be more active within the company and not always have to deal with roadshows and investor calls on such a frequent basis. All in all, I think there will be some negatives related to that, but it's not necessarily a bad thing.

LW: Looking a bit further into the future now, are there any emerging themes tied into these big megatrends that you're watching closely or that you think will grow into exciting investment opportunities?

JP: Well, there are plenty. 

really. In the short to mid-term, AI will help develop solutions in the pharmaceutical space, specifically in areas like oncology, and probably also Alzheimer’s and Parkinson’s.

One area that excites me a bit more long-term is the concept of a self-driving car. This will only happen very slowly, given the replacement cycle of cars. But we are at the beginning of huge changes in this industry, and the adoption of electric vehicles, having more data around electric vehicles, and greater data connectivity through satellites combined with AI will lead to a huge breakthrough with autonomous vehicles. That's one of my most exciting longer-term new themes where we currently have no exposure, but it's an area we are certainly looking at a lot and expect to bring into the portfolios in the future.

LW: Thank you, Jens. It's great to catch up with you again and hear your insights on global equities. If you enjoyed the episode, please tune in again soon to hear more from our global collective of experts.