Clean Economy

Innovative companies are creating solutions to address pressures on scarce natural resources and the need for greenhouse gas emission reduction.

What is the Clean Economy?

The Clean Economy fits within our clean technology (‘Clean Tech’) theme, and refers to companies who seek to have a positive environmental impact, by developing new technology across areas such as energy efficiency, smart grids, clean energy and sustainable resources.

Each day, more than 200,000 additional people populate the planet1  , further challenging how far natural resources must stretch to sustain human life. Clean Tech companies strive to create genuine solutions to help address these challenges.

The Clean Economy is the rapidly growing universe of companies whose activities improve resource sustainability, support the energy transition (from fossil-based to zero-carbon energy production and storage) or address the issue of water scarcity.

  • Source: Worldometer aggregate from United Nations Population Division, World Health Organization (WHO), Food and Agriculture Organization (FAO), International Monetary Fund (IMF), and World Bank, correct as at September 2020.

Why consider investing in the Clean Economy?

Consumers are demanding more of companies and governments as concerns over the sustainability of human civilisation on earth deepen. Consequently, we are seeing the growth of Clean Tech investing, as more companies embrace the circular economy and respond to the need for change.

We believe businesses that are prepared to adapt should have a sustainable, competitive advantage by reducing their input costs over the long-term, and, they could see significant growth potential in the decades to come. We believe that this could provide investors with exciting, new investment opportunities in companies that should stand the test of time.

The world is changing, and we have identified three reasons why we believe now is the time for the Clean Economy:

  • Environmental pressure is rising: In recent years the rising potential for human suffering and huge economic loss due to climate-related disasters has been driving more urgency than ever to manage carbon emissions and limit global warming. A lot has happened since nearly every nation on earth committed to a low carbon future by signing the Paris Agreement in 2015 but there’s still a long way to go and the transition to a low carbon future requires carefully balanced social and economic transformation.
  • Awareness is rising: Awareness of the impact of pollution is being increasingly driven by governments, consumers and corporates. There is strong regulatory support across the EU (Green Deal), US (Biden's administration) and even China (carbon neutral commitment by 2060).
  • Action is rising: Consumers are changing their consumption habits at a faster pace, while companies are investing massively in new clean technologies to avoid the rising cost of taxes and penalties from emissions and to guard against the impact of potential non-financial risks arising from a climate crisis.

These three combined are encouraging governments and companies to reassess their policies and start to implement meaningful change and invest in the circular economy and new Clean Tech.

Sustainable Investing

We aim to enable our clients to invest in the companies and projects leading the transition to a more sustainable world.

SUSTAINABLE INVESTING

Green bonds

Green bonds are among the most interesting innovations of the last decade in the field of socially responsible investment products.

SUSTAINABLE INVESTING

Sustainable Equity

Systematically identifies stocks with superior earnings quality and less volatility while also fully integrating environmental, social and governance (ESG) insights.

Our Clean Economy strategy

Our approach to investing in the Clean Economy seeks to identify high-quality, growth-oriented companies operating across one of four key investment areas impacted by the finite amount of natural resources. We believe these are the areas which will provide innovative, new investment opportunities:

  1. Low Carbon Transport: Across the world, the demand for sustainable transport is increasing, providing investors with ample investment opportunities in electric vehicles, battery technologies and emission reduction systems.
  2. Smart Energy: The necessity and demand for greener homes is growing, helping to provide the impetus and resources for the development of energy efficient technologies. This is creating investment opportunities in renewables, greener homes and efficient factories.
  3. Agriculture & Food Industry: Companies are exploring new ways to meet the growing demand of rising populations while limiting the use of scarce water and land. This is providing copious opportunities to invest in firms that are developing food and agricultural technologies.
  4. Natural Resource Preservation: Public opinion is shifting and putting pressure on companies to better manage supply chains - and is providing investment opportunities in companies who are mitigating their environmental damage and evolving their practices.

We only invest in companies which demonstrably generate a share of their revenues from the clean economy through an investment approach combining fundamental stock selection with a proprietary impact framework.

We aim to provide transparent and measurable impact metrics focused on UN Sustainable Development Goals contribution towards environmental and societal issues, including:

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What are some of the risks associated with this strategy

Currency management risk: The strategy will have exposure to foreign currencies. This means that changes in the value of the Australian dollar relative to other currencies may affect the value of the assets of the strategy. It is the Investment Manager’s intention to not hedge currency exposure to reduce the risk of adverse fluctuations in the value of the Australian dollar relative to other currencies.

Global investment risks: Investments in foreign securities may be affected by movements of exchange rates, changes in laws or restrictions applicable to such investments and changes in exchange control regulations (e.g. currency blockage).

Investments in small and/or micro-capitalisation universe: Investing in the small and/or micro capitalisation universe implies specific liquidity risk. The possible lack of a liquid market may inhibit the ability of the strategy to purchase or sell such investment at an advantageous price.

Please note all investments carry risks. Including but not limited to currency management risk, global investment risk, investments in small and/or micro-capitalisation universe risk, ESG risk, investments in specific sectors or asset classes risk, impact investments risk, emerging markets risk, company specific risk, market risk, liquidity risk, operations risk, please read the product disclosure statement.

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    Equity Trustees Limited (“Equity Trustees”) (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for the AXA IM Clean Economy Equity Fund. Equity Trustees is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT). This publication has been prepared by AXA Investment Managers Asia (Singapore) Ltd (ARBN 115203622)(“AXA IM Asia”), to provide you with general information only. In preparing this publication, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither AXA IM Asia, Equity Trustees nor any of its related parties, their employees or directors, provide and warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product.