The Russia-Ukraine war hit geopolitical stability, intensifying debates on de-globalization, reshoring, and improving supply chain resilience. According to Goldman Sachs Asset Management (GSAM), the war accelerated certain trends such as investment in the green economy.

With a changing political scenario, the investment management firm says that investment strategies must now consider the wider geopolitical and economic change. Goldman Sachs in a new report considers the rise in investments in renewable energy as the Ukraine war destabilized energy supply chains. It says that global investment in the green economy needs to scale up to $6 tn annually in this decade.

The asset management firm discusses the various investment avenues due to the Russia-Ukraine war. First up is investing in the energy transition for sustainable economic growth. “Fixed income investors can support the energy transition by investing in green bonds that are issued by companies and governments to finance environmentally-friendly projects, assets or activities,” says Goldman Sachs Asset Management.

GSAM gives the example of the US Inflation Reduction Act (IRA) under which incentives are being given to energy and climate projects. The asset management firm also sees investment potential in companies building up electric vehicle infrastructure.

“We believe today’s inflationary environment will increase demand for key next-generation technology solutions in areas such as cloud computing and digital transformation,” says the report. The rising focus on digitalization presents opportunities for investors.

Lastly, changing economic conditions are creating opportunities in certain markets, and thus diversification can help gain exposure to such trends. GSAM says that emerging market assets look attractive due to the low valuations and rising middle class, which will drive growth in the coming years.

View the complete insight here.