AIQ: Cleaning Up Capitalism

For too long, issues of justice and equality have been left out of the climate conversation. But policymakers, companies and investors are slowly beginning to acknowledge the social dimensions of climate action.

Renewable energy has a vital role to play if the world is to combat climate change. But its widespread adoption comes with a price. As older installations come to the end of their useful life, countries urgently need to work out what to do with the waste.

To align with net-zero emissions targets, the financial system needs a radical transformation. Can it get there and, if it does, what should it look like in 2050?

Internalise the climate externality. That is the major task facing policymakers and corporate executives. However, this requires accurate measurement and incorporation into financial accounts and neither are straightforward.

Energy majors, cement producers, utilities and financial services providers are among the latest targets of legal action designed to make them move faster towards a lower carbon world. Could this be an inflection point, as the conversation turns to specific responsibilities rather than vague commitments to change?

Nearly three decades after it first agreed to tackle climate change, the world has failed miserably to curb the growth in CO₂ emissions. To succeed, it urgently needs to establish an effective price for carbon.

Heavy industry and heavy transport are hard to decarbonise, but this must be done to reach net-zero emissions by 2050. Can companies, policymakers and investors join forces to make it happen? The race is on…

Some of the world’s biggest companies are setting ambitious net-zero targets, with significant implications for their supply chains. How impactful could the ripple effect be in helping to meet the goals set out in the Paris Agreement?

Technology firms are often favoured by ESG funds because of their ostensibly clean, asset-light business models. But investors need to look deeper and challenge unethical and unsustainable practices across the industry, argue Louise Piffaut and Charles Devereux.

No single technology is enough to tackle the climate crisis, a global and systemic issue that requires joined-up thinking. We flag different pathways to address warming gases in the atmosphere – five nature-based and five technical – and ask what steps are needed next.

The tech-driven trend toward direct-to-consumer is transforming consumer brands, their intermediaries and their marketing. Intimate relationships with customers and new shopping experiences are alluring, but companies must tread a fine line between hyper-personalisation and intrusion.

Quantum computers have the potential to shake up finance, cybersecurity and other sectors. But investors hoping to profit from the new technology must be patient – and separate reality from hype.

Like Washington and Brussels, Beijing is worried about the growing power of large technology companies. But China’s regulators are taking swifter, more radical action than their peers in the West.

Facebook, Twitter and other platforms are drawing criticism for their failure to tackle hate content. But will the hit to their reputation do any lasting commercial damage?

Regulatory authorities around the world are targeting the big US tech giants. However, while investors need to keep a watchful eye on developments, Big Tech’s stranglehold and influence on numerous economic sectors will be hard to loosen.

The coronavirus pandemic has spurred companies to upgrade their digital capabilities, boosting productivity and creating investment opportunities in previously overlooked niches.

Investors in China should view recent interventions by the government in the context of its history and longer-term strategic ambitions, argues Amy Kam.

Despite accusations Big Tech companies are too powerful, their stranglehold across sectors will be hard to loosen. However, while investors need to keep a watchful eye on developments, Big Tech’s stranglehold on numerous economic sectors will be hard to loosen.

In the latest instalment of our visual series on topical data themes, we look at the latest IPCC report, the significant decline in US real yields and people’s live TV versus streaming habits.

US Treasury yields have fallen appreciably in recent weeks, seemingly dismissing the threat of rising consumer prices. Some investors could be in for a nasty surprise if inflation proves more intransigent than anticipated, argue Michael Grady and Katarina Cohrs.

Emerging market debt investors need to keep a watchful eye on food price inflation as a potential key driver of monetary policy, especially as this has not coincided with a weaker US dollar, argues Nafez Zouk.

Like Washington and Brussels, Beijing is worried about the growing power of large technology companies. But China’s regulators are taking swifter, more radical action than their peers in the West.

Regulatory authorities around the world are targeting the big US tech giants. However, while investors need to keep a watchful eye on developments, Big Tech’s stranglehold and influence on numerous economic sectors will be hard to loosen.

The advent of tougher regulations after the global financial crisis led investors to think banks were safe. Was the Archegos scandal a wake-up call or much ado about nothing?

Deciding when to tighten the purse strings and hike taxes is complex at any time, and even more so when the economic fallout from COVID-19 remains unclear. Getting deficits – the gap between government spending and income – under control will need to happen eventually, but it would be a brave government that pursued such a goal now.

The market for sustainable bonds to fund activities that have a positive impact on the environment or society is booming. But there are many factors to consider before investing. Not least among them is a crucial question: is your money really being used to fund the activities promised?

Debate over the short- and longer-term consequences of COVID-19 dominated the Spring meetings of the International Monetary Fund, with our emerging-market debt team among those following discussions closely.

Deciding when to tighten the purse strings and hike taxes is complex at any time, even more so when the economic fallout from COVID-19 remains unclear. Getting deficits under control will need to happen eventually, but it would be a brave government to pursue that goal in the short term.

Massive intervention by central banks and governments in recent years has left investors struggling to value financial assets.

China’s economic rise threatens US supremacy and the global economic and financial order built up since 1945.

The inexorable rise in asset prices caused by the seemingly never-ending era of monetary easing is calling into question long-held investment beliefs, as members of our multi-asset & macro and equities teams explain.

The COVID-19 pandemic has highlighted the importance and fragility of the natural balance. As governments, companies and investors aim for a just transition, sustainable bonds are being issued at pace in different formats. Is it a fad, and do markets really need so many varieties?

The path to a sustainable future for private markets is full of opportunity but also complexity, as Laurence Monnier and Ed Dixon explain.

Watch our video to find out how offices can provide a powerful tool in boosting productivity, and attracting and retaining the best talent.

The global pandemic may have accelerated demand for data infrastructure, but the underlying drivers behind the growth of data centre markets go far beyond short-term factors, explains Laurence Monnier.

The green premium is an elusive concept. Laurence Monnier reviews the academic literature and crunches some numbers to try and quantify the extra pricing power afforded by more sustainable commercial properties.

Asset managers of many different hues claim they are thinking harder about their social role: the ‘S’ in ESG. But evaluating social value generated from investment decisions is not straightforward, as consultant Dr Kelly Watson from Hatch explains.

The inequalities highlighted by COVID-19 have led to much soul searching, including among investors on whether they are doing enough to address the issues of the day. Ed Dixon, Aviva Investors’ head of ESG - real assets, contemplates how investors in tangible assets can put capital to work to drive change.

The tragedy and destruction caused by the Blitz created an unintended natural experiment in urban redevelopment. Chris Urwin reflects on what this can teach us anything about agglomeration economies and the resilience of cities.

Unlike liquid markets and real estate, a lack of publicly available data has made assessing risk more challenging for infrastructure equity assets. Laurence Monnier considers the options for investors looking to complement qualitative assessments with quantitative rigour.

Herd-like lending behaviour is counter-productive and exacerbates real estate risks. Gregor Bamert argues a wider range of capital sources and investment approaches may help combat this in future.

Low interest rates, regulation and ESG risks are not new considerations for insurers’ investment strategies. However, the long-term fallout from COVID-19 is adding a layer of complexity they will need to adjust to.

In our monthly visual series on topical data themes, we look at whether Bitcoin could be the new gold, if COVID-19 has put pressure on London office rents, and the extent to which transport affects the carbon footprint of foods.

Talent, clusters and scale are three key reasons why Paris is one of the world’s most attractive office markets, explain Souad Cherfouh and Chris Urwin.

Too much emphasis on geographic and sector diversification within real estate portfolios can hinder alpha generation. More focus on lease length, asset quality and other factors is a preferred means of reducing specific risks whilst allowing specialisation, argues Tim Perry.

We take a visual approach to highlight why Copenhagen is such a rich, vibrant and economically prosperous city.

In the first of a new monthly series, we take a visual approach to illustrate topical data themes in economies, markets and beyond. This month we look at the correlation between stock market performance and vaccinations, the illiquidity premium in real assets, and whether there are still more men called Dave running funds than female managers.

Our Head of ESG, Ed Dixon, recently joined Blackstock Consulting on a PropCast episode to launch their new series of ESG insights with industry leaders. Together, they discussed how the government needs to be partnering with businesses to reach their climate pledges, how the “green premium” is yielding higher rents for eco-friendly offices, and much more.

Interest in ESG investing is expanding at a seemingly exponential rate – and with it the risks of greenwashing only grow. However, Alex Edmans explains why he believes it is possible for companies and investors to create win-win situations for all stakeholders.

For too long, issues of justice and equality have been left out of the climate conversation. But policymakers, companies and investors are slowly beginning to acknowledge the social dimensions of climate action.

Renewable energy has a vital role to play if the world is to combat climate change. But its widespread adoption comes with a price. As older installations come to the end of their useful life, countries urgently need to work out what to do with the waste.

The latest assessments from climate scientists suggest some geographical zones that have been lived in for thousands of years are becoming uncomfortably hot and fire-prone or wet and vulnerable to flooding. How will humanity adapt to new extremes? Rick Stathers assesses the evidence.

To align with net-zero emissions targets, the financial system needs a radical transformation. Can it get there and, if it does, what should it look like in 2050?

Internalise the climate externality. That is the major task facing policymakers and corporate executives. However, this requires accurate measurement and incorporation into financial accounts and neither are straightforward.

With the noise and interest in ESG investing reaching levels that would have been unthinkable a few short years ago, much of the analysis surrounding it is becoming polarised. A more sophisticated conversation and debate is required, argues Mark Versey.

Energy majors, cement producers, utilities and financial services providers are among the latest targets of legal action designed to make them move faster towards a lower carbon world. Could this be an inflection point, as the conversation turns to specific responsibilities rather than vague commitments to change?

If the world is to achieve the goals of the Paris Agreement, the international financial architecture needs far stronger coordination under a re-tooled OECD, writes Steve Waygood.

Investors in China should view recent interventions by the government in the context of its history and longer-term strategic ambitions, argues Amy Kam.

To meet the goals of the Paris Agreement, finance must embrace a holistic approach to managing its impact on the environment. Eric Usher, head of UNEP FI, talks to AIQ about this shift in focus and the importance of public and private sector collaboration.

The prominent climate change campaigner and founder of green energy supplier Ecotricity discusses biogas, the energy crisis and the need for a shake-up in government policy to achieve net zero in a wide-ranging interview with AIQ. Words by Miles Costello.

With tensions set to rise further as disputes over scarce resources intensify, we look at the geopolitical, economic and investment implications.

China’s regulators are taking swift, radical action against tech companies they consider to be too big and powerful. How should foreign investors respond?

Will a world beset with challenges spin into catastrophic breakdown or spur humanity to change and reach new heights? John Elkington, widely regarded as the ‘godfather of sustainability’, contemplates the future with AIQ.

Despite accusations Big Tech companies are too powerful, their stranglehold across sectors will be hard to loosen. However, while investors need to keep a watchful eye on developments, Big Tech’s stranglehold on numerous economic sectors will be hard to loosen.