Climate change has led to adverse weather conditions across Europe East Africa and even Pakistan. To add to the problems, Russia’s invasion of Ukraine caused an unexpected energy crisis which has made renewables even more important. Aviva Investors says that real asset investing will play a key role in the green transformation process.

“Buildings and infrastructure emit significant quantities of carbon and are likely to face physical risks from climate change. New climate regulation may also render older, inefficient assets obsolete. But these trends will also create opportunities for forward-thinking investors to invest in greener assets aligned to the transition – and improve and upgrade those that are not,” as per James Tarry, Head of Multi-Asset Portfolio Management, Real Assets, Aviva Investors.

The investment management firm says that the world needs to move faster towards net zero emissions, and real assets which have been re-rated during the recent market turmoil can be refurbished, upgraded, and decarbonised to meet climate objectives.

Renewable energy infrastructure is a key part of climate transition, helping avoid emissions and achieving environmental objectives. Aviva talks about how it plans to capitalise on this opportunity.

Tarry talks about the importance of investing in renewable energy and says that there needs to be an investment in the varied pipeline of renewable energy and not just ‘operational or ready-to-build renewable assets.’

Aviva believes that investment in natural capital can “provide real assets portfolios with a diversification benefit” and sustainable investment in natural capital like forestry can deliver long-term benefits and hedge against rising carbon prices.

Additionally, Aviva says, “it is often better to invest in improving existing buildings than to build from scratch” to reduce emissions as we strive for net-zero. The investment management firm says it is seeing rising demand for energy-efficient office spaces.

Read the full interview here.