A determined effort by both the public and private sectors to bring about a 50% reduction in greenhouse gas emissions by 2030 offers the potential for significant capital growth in equities. This new era of climate transition, which will be followed by the transition to net-zero emissions by 2050, presents equity investors with clear opportunities for generating significant alpha using an active, high-conviction approach to investing.
The implications for investors are clear: Climate transition planning and competency will become key areas of differentiation for companies — and key drivers for the valuation of all equities. In this shifting climate landscape there will be re-ratings, valuation dislocations, and corporate winners and losers, which create an environment ripe for active stock-picking.
State Street's Fundamental Growth & Core Equity team has developed climate-related strategies that aim to generate long-term capital growth through investment in equity securities which contribute directly to climate change mitigation and/or are leaders in their industries regarding climate change preparedness and transition planning.