The world will “struggle” to achieve real economic growth in the wake of COVID-19 if it doesn’t make the shift to renewables, according to AXA IM.
Speaking at the Portfolio Construction Forum Markets Summit 2021, AXA IM Core Investments CIO Chris Iggo said that the world has a “great need for economic growth” as concerns increase about debt and unemployment – and renewables could be the answer.
“If you are a carbon emitter, you are increasingly paying a higher cost for that. The scope of companies and activities affected is growing, and continuing with the status quo is becoming uneconomic,” said Mr Iggo, adding that Australia could see “substantial growth prospects” as a large solar and wind energy producer.
“This could be a great long story for Australia and some emerging market countries which are renewable energy-rich. A full transition to renewable energy could really transform these economies and also significantly increase their political power on the global stage.”
That coming energy transition – which is set to accelerate under US President Joe Biden, who has signalled support for green policies – means investors will need to “engage urgently to protect portfolios” and explore growth opportunities.
“Investors will need to think hard about asset allocation. As we go through the energy transition, there will be assets that become stranded or worthless. Growth won’t come from the same areas it has in the past,” Mr Iggo said.
“The cost of renewable energy is falling massively. There are opportunities to invest in the new technology and the companies developing the new processes. There is growth in strategies that are available now to invest in the transition.”
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