As the world faces several environmental and social challenges, the theme of sustainable investing has gained momentum. According to M&G Investments, “Sustainable and impact investors can create an impact by investing in companies and projects driving the transformation towards a more sustainable world, or those innovating in their fields to create better outcomes for people and the planet.”
The asset manager informs that fossil fuel energy production contributes 40% of global emissions. Hence, the transition to a clean energy system will be essential for any successful attempts to halt climate change, it adds.
Separately, M&G states that sustainable investing in clean energy technologies reached $1.1 tn in 2022, matching fossil fuels for the first time. It also highlights the positive progress within the regulatory landscape and that several companies are contributing positively towards the transformation of the global energy economy.
“Successful climate change mitigation will require steep emission reductions from companies across all industries,” says the asset manager. M&G contends that science-based targets can play a crucial role in these efforts by offering companies with a framework to assess their goals and actual reductions.
Subsequently, the asset manager highlights that over the next few decades, increased efficiency will be required to lower the usage of energy (and the associated emissions). This will also help in the most optimal usage of depleting natural resources and support livelihoods for the expanding global population.
On the role of sustainable investing in the economy, M&G highlights, “the shift to a circular economy is inextricably linked to improving efficiency and can play an important role in efforts to halt climate change and limit biodiversity loss. In short, it is the decoupling of economic activity from the use of finite resources by eliminating waste and reusing or recycling products and materials.“
In conclusion, M&G opines that both investors and companies are in a favourable position to establish a “positive virtuous circle” aimed at addressing the various environmental and social challenges of our era.
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