Page 18 - Investment Advisor - December 2021

ESG HORIZONS

By Anastasia Amoroso, Kunal Shah, and Tatiana Esipovich

5 Ways to Invest in Clean Tech That Are

Wins for Clients

For advisors struggling with how to invest in climate-friendly technology,

the opportunities are many.

he climate crisis we collectively ing technologies like batteries and charg-
face may be the defining story of ing networks, is helping slow the pace of
Tour age. Already we are witness- vehicle emission growth. The overall EV
ing its devastating impact through rising market is expected to grow nearly five-
temperatures and frequent destructive fold by 2026 to more than $700 billion.
weather events. Broad support by gov- Beyond EVs, there also are tailwinds
ernments and companies should pro- in areas such as eco-friendly micro-
vide tailwinds for investments that help mobility — for example, solar-powered
reduce greenhouse gas (GHG) emissions. e-bikes — and low carbon fuels in areas
For investors, decarbonization invest- such as trucking and aviation, for which
ments offer the opportunity for solid battery technology is not yet suitable.
returns and a positive social and environ-
mental impact. Decarbonization efforts across agricul- 4. Industry
Advisors who struggle on how to deter- ture are expected to drive the value of Heavy industry is responsible for 23% of
mine where and how to impact invest for the AgTech market up to $22.5 billion by U.S. GHG emissions, largely via manu-
clients can use these ideas as a pathway. 2025, from just $9 billion in 2020. facturing processes. Decarbonization
Numerous innovations have emerged technologies can help make manufac-
OPPORTUNITY SET across the value chain. The vertical turing more efficient by, for example,
The vast majority of decarbonization farming sector, for example, in which reducing energy consumption via indus-
investment falls into these five categories: crops are grown on stacked surfaces, is trial robots and developing low carbon
expected to grow six-fold globally from alternatives to traditional inputs.
1. Electricity and Power Generation 2018 to 2026 to reach a market value of
Government subsidies have encouraged $12.8 billion. Elsewhere, artificial intel- 5. The Built Environment
the decarbonization of power genera- ligence (AI) and machine-learning algo- The buildings, streets and spaces in which
tion since the early 2000s. indeed, solar rithms are helping optimize growing we live are significant GHG emitters. Real
and wind technologies have become a conditions and improve crop yields. estate represents approximately 15% of
key part of the energy mix, and new- Alternative proteins also are boom- global GDP, but the construction and oper-
build renewables are now cheaper than ing. With cattle farming responsible for ation of buildings is responsible for nearly
coal in much of the world. nearly 10% of global emissions, people 30% of emissions. There are opportunities
However, the burning of fossil fuels are increasingly turning to plant-based for innovation across the real estate value
for electricity still accounts for 25% meat alternatives, according to the Food chain, from more efficient construction
of U.S. GHG emissions. Private capi- and Agriculture Organization of the methods such as 3D printing to the use
tal is financing innovations that look to United Nations. The global meat substi- of smart devices to monitor and manage
improve the reliability of — and thereby tutes sector is worth $21 billion. buildings. Potential solutions also include
facilitate greater adoption of — renew- the creation of smart cities that harness
able energy, such as smart grid and bat- 3. Mobility and Transport new technologies such as interconnected
tery storage technologies. Transport is responsible for nearly 30% smart street lighting, waste management,
of U.S. GHG emissions, with most com- and water and gas metering.
2. Food and Agriculture ing from cars, trucks and buses. However,
Globally, food systems account for significant innovation in the electric Anastasia Amoroso, Kunal Shah, and Tatiana Adobe Stock
over a third of GHG emissions. vehicle (EV) space, including in support- Esipovich are with iCapital.

16 INVESTMENT ADVISOR DECEMBER 2021 | ThinkAdvisor.com