26 OCT, 2020
By Constanza Ramos
“If governments are to deliver on their targets around Climate Change and the transition to sustainable energy sources for 2030, 2050 and beyond, they must further accelerate their adoption of Clean Energy”Colm O’Connor, Lead Manager
KBI Global Investors, which boasts a commitment to Responsible Investing dating back to the early 1980s, has chosen World Energy Day 2020 (‘WED’) to highlight the importance of a global transition to Clean Energy.
Powered by increasing regulation and advancing technologies, the Dublin‐based firm believes we are at a “tipping point” in energy production and usage.
“We are excited by the opportunity set in front of us and believe we have reached a ‘golden age’ for Clean Energy”, says Colm O’Connor, Lead Manager on the firm’s 20‐year‐old, €200m Energy Solutions Strategy. Adding a word of caution, he says that “if governments are to deliver on their targets around Climate Change and the transition to sustainable energy sources for 2030, 2050 and beyond, they must further accelerate their adoption of Clean Energy.”
Observed annually on 22 nd October since 2012, WED is celebrated all around the World to raise awareness of the need to rally around the creation and implementation of policies which increase energy efficiency and conserve natural resources; its overarching aim is to demonstrate the impact of the energy choices we make on the environment. The €750bn EU Green Deal package has Climate Change at its heart, with 30% of the entire package earmarked for climate protection, and a further commitment that all spending must contribute to EU emissions‐cutting goals. The 2020 World Energy Day celebrations and Conference are timely for KBIGI, which manages a comprehensive suite of Natural Resources strategies.
Everywhere we look we see governments working to reinflate their economies, with Climate Change at the heart of their stimulus programmes. These stimulus packages will drive investment capex into more renewable capacity globally, increasing the need for equipment and strengthening the growth prospects of renewable developers.
Strategies invested in the transition to Clean Energy will also benefit from exposure to key structural growth trends such as decarbonisation, smart building technologies, smart grid infrastructure, increased use of energy storage and disruptive technologies. We have seen many major technological advances in recent years, with wind and solar now the cheapest forms of energy in many parts of the world. “That”, says O’Connor, “will drive global growth in installations.”
Highlighting the breakthrough seen in other areas of technology such as transportation, where we are seeing a transition from an oil‐based to an electric‐based light duty vehicle, we have he believes reached a “tipping point. We are”, he says, “very excited about that in the near term, but as we get to the latter part of the decade, it is clear that advances in transportation and our fuel mix will be nothing like enough if we are to achieve our CO2 targets. It is encouraging to see policymakers starting to address this through the adoption of hydrogen as an alternative fuel, the big advancement here powered by the falling cost in renewables as a major input into hydrogen production. We must however enact further change and move fast if we are to reach decarbonisation targets in areas like cement, steel and aviation.”
KBIGI launched its long‐only, high conviction, actively managed Energy Solutions strategy in the year 2000 – developing specialist expertise in this area and the transition to sustainable or Clean Energy over the years. The manager has always observed tremendous potential in the opportunities being presented by companies providing low carbon solutions to the world’s accelerating demand for Clean Energy and expects to see significant investment in energy solutions over the next two decades, in which technology and infrastructure in areas such as smart grid, LED, battery storage, power transmission and metering will play a major role. This investment in energy of the future,rather than the past, has helped the strategy to generate strong alpha versus the broad market (MSCI ACWI index) over the past 1, 3 and 5 years.
The auto sector’s transition towards a more efficient and more electric future will be a particular driver of the KBIGI strategy. The pace of adoption of electric vehicles has picked up significantly and the firm expects the falling costs of batteries as well as increased subsidies to continue to drive it forward.
“We are investing capital, on behalf of our clients, in companies whose core businesses are delivering solutions to address, mitigate and adapt to Climate Change”
“We firmly believe investment can and will make a positive difference to the planet, and the way we live and work both today and into the future.”Colm O’Connor, Lead Manager
Underlining its commitment, KBIGI recently announced its participation in the newly launched ‘50 Sustainability & Climate Leaders’ campaign, which shows us how companies across different sectors are responding to global emissions and pollution.