Climate change and resource scarcity

ETFs
iShares

Summary:  Increasingly, investors are looking to mitigate risk and capture opportunities associated with the transition to a low-carbon economy. The transition to a low-carbon economy is driving an economic transformation spurred by government policy, technological innovation, and consumer preferences. This shift comes at a time when rising consumer demand for food, energy and materials continue to strain resources


Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

We believe the transition to a low-carbon economy is among a handful of major structural shifts that we see rewiring economies, sectors and businesses. A major capital reallocation is expected with investment growing rapidly in some areas. Solutions and investment are also needed in agriculture as the need for nutrition rises with per capita GDP in large emerging markets.1 This greater demand will have to be satisfied with less availability of resources; worldwide, land area dedicated to agriculture has not increased in the last 20 years.1 To produce more with less, productivity improvements need to be significant.

Megatrend in three stats

  1. $3.1 trillion to $5.8 Trillion - the annual investment needed in energy supply and infrastructure over the next three decades to meet the net-zero target 2
  2. 2 Billion people will be added to the world's population between 2020 and 2050, increasing demand for basic necessities, such as food3
  3. 5.7 Billion people globally could face medium to severe water stress by 20504

There is no guarantee that any forecasts made will come to pass. All amounts given in US Dollar.

Megatrends are broad drivers of global change, identifying more focused themes which tap into one or more megatrends allows you to invest in these potential opportunities. When looking to invest into these trends, for climate change and resource scarcity, you could focus on a low-carbon transition with a theme that may benefit from this shift such as renewable or clean energy. To focus on resource scarcity, a theme focused on agriculture and farming can provide exposure. Alternatively, a broader more holistic theme may appeal to you, such as one focused on building and managing the cities of the future.

Sources

  1. Our World in Data, Dec 2020
  2. BloombergNEF, Jun 21.06.2021
  3. United Nations “World Populations Prospects”, Jul 2022
  4. UN World Water Development Report, Mar 2023

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