The COVID-19 pandemic has made 2020 a truly singular year. With a deep global recession resulting from strict lockdown measures being implemented throughout much of the world, there has been little for investors to cheer. But with signs that the worst may be mostly behind us, an increasing number of opportunities will undoubtedly present themselves as we move into 2021.
Technology has responded to the call to produce innovations that will slow global warming, creating an arsenal of renewable-energy alternatives to fossil fuels. But distribution of these innovations to developing countries has not kept pace, and they are lagging behind in low-carbon adoption. What needs to be done to transfer and deploy existing low-carbon technologies throughout the globe as quickly as possible? The answer lies in solutions such as trade.
On December 15, US bank Goldman Sachs announced what many believe to be the strongest restrictions on fossil-fuel activity by any major bank in the United States. Most notably, the bank has become the first big American lender to restrict financing on any part of the oil-and-gas sector, with a particular focus on protecting the Arctic National Wildlife Refuge.
Fossil fuels have been the mainstay of energy generation for decades, but the move away from carbon-based, nonrenewable fuels is being driven by concerned citizens and governments, although nations are falling short of targets. There will be winners and losers during the transition to a carbon-neutral world economy, and investment-portfolio managers want to be in the winners’ group. What are the climate-change, carbon-transition risks that portfolio managers need to consider?
At the end of July, JPMorgan Chase revealed its plans to facilitate $200 billion in clean-energy financing through 2025. The announcement follows on from similar promises made back in 2015
The Paris Agreement, signed by nearly 200 countries just a few months ago, marks a significant global shift away from investment in fossil fuels to renewable energy. 2015 was a banner year for the development of clean energy; although the pace has slackened somewhat in 2016, financial heavyweights continue to grow their “green” investments.
The Paris Agreement has been touted as the antidote to global warming; with countries agreeing to jointly reduce greenhouse-gas emissions, climate change will be dealt a severe blow. But the success of the treaty rests largely with individual nations and how successful they are in implementing policies for the short- and long-term.