Investors that ignore the development of technologies driving the “sustainability revolution” will lose out on potential returns, says Nanuk Asset Management.
Speaking to InvestorDaily following a media event in Sydney yesterday, Nanuk Asset Management chief investment officer and portfolio manager Tom King said investors would need to think “very deeply and broadly” about the implications of changes brought about by developments in sustainable technology.
“This is not a set of changes that presents a small number of interesting growth opportunities,” he said.
“It’s a set of changes that have widespread, quite profound impacts on large parts of the global economy.”
Investors that ignored developments in sustainable technology would be repeating mistakes similar to that of investors in the past that failed to spot emerging opportunities, Mr King suggested.
“If you’d ignored what was going on in renewable energy five and 10 years ago, depending on where you were investing, you could’ve lost a lot of money through being exposed to fossil fuel generators, in markets where power prices have fallen because of increasing renewable energy generation.
“That kind of dynamic is going be repeated over and over around the world in a wide range of industries.
“Investors need to be thinking about what the consequences of some of these changes are because the negative effects will evidence themselves quite early on in the adoption of new technologies.”
While the sustainability revolution presented “interesting investment opportunities”, Mr King signalled there were also “a significant array of risks which people have embedded in investment portfolios”.
He said these risks were “broader” and were “not necessarily on people’s radar yet”, pointing to a future where the advent of electric and autonomous vehicles would carry implications for transport business, infrastructure, property, car parking, logistics businesses and more.
“There are significant parts of the global economy that are likely to face headwinds or decline as a result of these sustainable technology transitions,” Mr King said.
At the media event, Mr King said the sustainability revolution was defined by developments such as “renewable energy, autonomous driving and the industrial internet of things”.
To illustrate his point, he referred to, among other things, the fallen prices of solar panels, which had dropped by more than 99 per cent since 1976, as well as the gravitation towards sustainable technology by vehicle manufacturers such as Volkswagen and Ford, which have invested billions in electric vehicles.
He indicated that while much of the development in sustainable technology was indeed in technology such as solar, wind, LED lighting and electric vehicles, it was also “true of a much broader range of sustainable technology and products that are not in the headlines today”.
“It’s simple things like energy efficient power convergent devices, energy efficient motor controls, energy efficient building management systems, advanced and sustainable materials that are becoming cheaper and adopted in more applications,” Mr King said.