The Green Zone
The Paris Agreement in 2015 drew a line in the sand for everyone concerned with environmental and sustainability concerns. It’s where many business leaders finally awoke to the financial risks of climate change. And it’s largely why supporting the energy transition to a low carbon world has since become a priority for governments and corporations globally.
The energy transition describes the transformation of the global energy sector from fossil-based systems of energy production and consumption to renewable energy sources. Switching from non-renewable energy sources like oil, natural gas, and coal to renewable energy, such as wind or solar, is made possible by technological advancements and a societal push toward sustainability.
Russia’s invasion of Ukraine dialled the wake-up call to European leaders when it comes to energy supplies, while energy market volatility continues to pose vexing questions about striking the right balance between long-term transition goals versus near-term energy security. Across the Atlantic, meanwhile, the climate, tax and healthcare bill – or ‘Inflation Reduction Act’ – represented the most significant climate legislation ever enacted in the US.
Increasingly, the spotlight is on sustainable finance to provide solutions that will help to accelerate the energy transition. And the good news for investors is that there are a number of ways they can help to finance a radical transformation of the energy mix.
Green bonds, for example, are arguably one of the best fixed income vehicles available to accelerate the low-carbon transition. The proceeds of green bond issuance go towards financing projects that contribute positively to the environmental and energy transition. This includes the development of zero-carbon mobility, energy renovation of housing and public or private commercial buildings, or the development and storage of renewable energy.
Sustainable equity, too, presents a long-term opportunity for investors. Fossil fuels will continue to play an outsize role in energy markets, even if green alternatives come online faster than expected. Yet companies that are part of the transition – those involved with wind, solar, energy storage, nuclear, hydropower and biomass – make a strong investment case.
Moreover, as biodiversity loss joins climate change as one of the most pressing global systemic risks, increased innovation is required across multiple asset classes to finance nature-based solutions for oceans, forests, and agriculture – from energy transition and infrastructure programmes to private equity and blended finance projects.
With investors increasingly wary of greenwashing, Mirova’s Soliane Varlet says engagement is the path to more transparency and a more sustainable future.
For sustainable investors, navigating the regulatory and political landscape has become a real challenge in recent years. What does the future hold?
While COP15 paved the way for new regulations, achieving zero biodiversity loss by 2030 requires a concerted effort among investors and consumers alike.
In 2022, green bond volumes fell year-on-year for the first time in a decade. Mirova’s Bertrand Rocher and Agathe Foussard explain why 2023 looks brighter.
Find out how Mirova’s Soliane Varlet began her journey in sustainable investing and what keeps her motivated as a portfolio manager.
Find out how Mirova’s Bertrand Rocher began his journey in sustainable investing and what keeps him motivated as a portfolio manager.
For investors looking to have a positive environmental impact, green bonds are among some of the most transparent fixed income investments available
Not all green bonds are created equal. Thankfully, some managers will only invest in an issuer if the impacts are sufficiently clear and achievable.
With governments now coming aboard the energy transition train, investment opportunities abound in the shift from fossil fuels to cleaner alternatives.
Whether it’s climate change, biodiversity loss, or pollution, our oceans will play a pivotal role in tackling the most pressing planetary crises.
Is it really worth paying a premium to issuers of green bonds over conventional bonds? And which factors might catalyse this ‘greenium’ in the future?
Diverse minds fuel insightful ideas. And ideas mean opportunities.