The climate emergency remains one of the biggest threats we face. As we recover from Covid-19, we can’t replace one health emergency with another – we need to come out of this crisis embracing a new normal which puts tackling the climate emergency at the heart of everything we do.
Sadiq Khan, Mayor of London.
Wise words, that we agree wholeheartedly with. ‘Build back better’ has become the new mantra for post-COVID-19 hopes and ambitions. Many of us are realising that going back to how things were is neither possible nor desirable.
During the crisis we must focus on the present. But as investors we must also consider the longer term.
An opportunity to reset and revise
The economic slowdown due to the pandemic has led to record low levels of environmental pollution and more sustainable consumption patterns. We now have the potential to rethink the path we want to take going forward. Can we create a ‘new normal’ that operates within safe planetary boundaries?
To show our commitment to this on the global agenda, we have signed a collaborative investor letter to EU leaders, advocating for a sustainable recovery from Covid-19.
Building back better
The EQ Positive Impact portfolios are full of examples of companies that will help us to build back better by solving tomorrow’s problems, today. We’ve highlighted five themes below that we are investing in now:
Sustainable cities require green connectivity, including public transport and low-carbon personal transport. Electric vehicles offer further opportunities: Tesla reports that it has avoided 3.6 million tonnes of carbon dioxide emissions from its vehicles sold to date. Umicore is the world’s largest battery recycler, reusing the precious metals in 7,000 tonnes of waste batteries (equivalent to 35,000 electric vehicle batteries) each year.
Greening the grid
Combining renewable energy with electrification is the most effective way to limit global climate change. We invest in the electric utilities Iberdrola, Europe’s top clean energy producer, and Ørsted, the Danish utility that transitioned its entire business model to meet carbon neutrality by 2025. In 2019 alone, Iberdrola added 2864MW of new renewable energy capacity and Ørsted completed the construction of Hornsea One – the largest offshore wind farm in the world with 174 turbines.
Sustainable cities require sustainable living spaces. Affordability is also a key socioeconomic problem, and we invest in housing association bonds across the UK to finance affordable and social housing. Places for People acquired and constructed an additional 2,600 homes to rent at affordable rates in 2019. With 20% of carbon emissions originating from the built environment, insulation panels from Kingspan and smart LED lights from Signify can provide substantial energy and emissions savings.
Waste & recycling
Building back better should entail a more responsible use of scarce resources. Tomra is the world leader in ‘reverse-vending machines’ for plastic bottles – capturing 40 billion containers every year by offering consumers a cash bonus for recycling. Meanwhile Befesa provides recycling solutions for dangerous residues from the aluminium and steel industries.
Investing in green bonds helps business and government to finance new environmental projects. In 2019, BNP Paribas’ green bonds financed 63 renewable energy, 4 green transportation, and 10 green buildings projects. Meanwhile the Asian Development Bank has issued green bonds to finance climate change mitigation and adaptation projects across Asia’s developing nations.
Find out more
Our fourth annual positive impact report focuses on the opportunity to build back better in a post-pandemic world.