Understanding the European Green Deal: A path to sustainable investment

This ambitious transformation requires an estimated expenditure of EUR 1 trillion by member states to finance the Green Deal's objectives. As new funding frameworks emerge to facilitate positive change, opportunities for innovation and investment naturally arise. Businesses offering innovative solutions and contributing to a more sustainable future are poised to benefit from this financial influx, as demand for their products and services is expected to grow.

Exploring investable themes

As members of the Investment Committee, we continually seek out exciting and investable themes. Megatrends, which evolve over time, present avenues for investor returns. The European Green Deal specifically highlights opportunities in clean energy, sustainable mobility, and the circular economy, among others. Understanding how these megatrends will unfold is essential for forward-thinking investors. Delving into companies aligned with these trends provides deeper insights into the investment potential of these themes.

Company spotlight: Sika

Sika, a specialty chemicals company, plays a pivotal role in enabling greater environmental compatibility within the construction and vehicle industries. Noteworthy is Sika's significant progress in developing water reducers for concrete, saving over 6 billion litres of water annually. Additionally, their research aims to optimise cement production, thereby reducing carbon footprint and raw material usage. As the need for achieving net-zero emissions grows, Sika's innovative solutions position it well to capitalise on emerging investment opportunities.

Company spotlight: Infineon

Infineon, a semiconductor manufacturer, aligns with the theme of a sustainable future through its focus on clean energy and efficient transport networks. Their products, integral to electric and autonomous vehicles, are crucial for the European Commission to meet its emissions targets. Infineon's contributions to sustainable mobility highlights its potential for investors seeking exposure to the green economy.

Company spotlight: Energiedienst

Energiedienst comprises a portfolio of companies supplying customers with renewable energy, primarily generated from hydroelectric power. Over the years, the business has diversified its operations to offer solutions for energy production via solar panels, as well as improving consumption efficiency through smart metering systems and heat pumps. Companies like Energiedienst play a pivotal role in expanding the accessibility of environmentally friendly power generation, presenting compelling investment opportunities in the renewable energy sector.

Navigating challenges

Despite its transformative potential, the European Green Deal faces criticism and challenges. Political opposition within Europe, particularly regarding the "Farm to Fork" strategy, and concerns over potential competition from US subsidies pose hurdles. However, the Green Deal encapsulates powerful long-term global trends, promising significant transformation and creating ample investment opportunities for forward-thinking investors.

In conclusion, the European Green Deal represents a landmark initiative driving sustainable development and offering lucrative investment prospects. By understanding its objectives, exploring investable themes, and identifying companies aligned with its goals, investors can position themselves to benefit from the transition to a greener economy.

At Arbuthnot Latham, we offer a range of portfolio solutions to suit our clients own financial and personal goals. Talk to us today about our sustainability portfolio, or wider product range, if you would like to learn more.