Many see this crisis as an opportunity to speed up the shift to a more sustainable world.
Since the announcement of the European Green Deal in December 2019, the world has been gripped by the Covid-19 pandemic. What has been the impact of the last six months?
The Covid-19 health crisis is profoundly questioning our current economic development models. It has shone the spotlight on some major environmental and social challenges that are affecting societies globally, both over the short and long term, including climate change, loss of biodiversity and rising inequality. The impact of the pandemic has also revealed the need for greater economic sustainability, whether it is investment in sustainable resources, green mobility or responsible consumption. Many see this crisis as an opportunity to speed up the shift to a more sustainable world and create a ‘green recovery’, which finances innovations that fight against environmental degradation and global warming, while preserving natural capital.
How has the European Green Deal supported the portfolio companies in which you invest?
Essentially, the European Green Deal is a strong push in the right direction. Companies can benefit from the political support to transition toward the sustainable economy, which translates into the right legal structures and regulations to foster this transition. All the companies currently in our portfolios are well positioned to capture the structural growth this will bring. The focus on renewable energy, clean mobility, building renovation, hydrogen and the circular economy should act as a catalyst for greater innovation and progress with respect to the environmental transition. The deal should therefore help provide a tailwind to European companies leading the charge in addressing these challenges.
Can you give examples of companies that are well positioned to benefit from an acceleration of the ecological transition?
One of the key areas of focus in the European Green Deal is the roll-out of cleaner, cheaper and healthier forms of public and private transport. Two portfolio companies poised to benefit from this trend are the French firm Alstom and Dutch group Alfen. Since 2015, rail company Alstom has become dedicated to sustainable mobility on a global scale aimed at expanding to serve all continents. Its growth prospects are linked to population growth and the expansion of urban planning and conurbations worldwide. The company focuses on urban mobility markets such as electric buses, trams and metros as well as associated green infrastructure. In addition to the benefits of electrification in terms of energy efficiency, the development of electrified transport systems also has a positive knock-on effect on areas such as safety, noise, materials efficiency and hazardous waste. Alfen offers solutions for the integration of renewable energies in networks. And it has a unique position in the energy transition, which is why we think it should achieve solid growth prospects linked to the market for smart grids, energy storage and electric vehicle charging. It has benefited not only from the take-off in renewable energy production but also the requirements for distribution from producers to consumers. The group produces electrical chargers, transformers for power grids, stationary storage capacities as well smart electricity grids for integration. In addition to the investment opportunity associated with both Alstom and Alfen, both companies receive Mirova’s highest ESG rating* and their activities directly help in the achievement of the UN’s Sustainable Development Goals in the area of affordability of clean energy (Goal 7), industry innovation and infrastructure (Goal 9) and climate action (Goal 13).
* The information provided reflects Mirova's opinion / situation on the date of this document and is subject to change without notice.
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