Peter Michaelis

Green ‘industrial revolution’ highlights non-linear nature of change

Peter Michaelis

Recent days have seen a multi-billion pound commitment to a ‘green industrial revolution’ in the UK, with a 10-point plan including measures on offshore wind, nuclear energy, phasing out new petrol and diesel cars by 2030, and banning gas boilers within new homes within three years.

All of this is positive but we reiterate our view that much more is needed: with the UK required to halve carbon emissions every decade to meet Paris Accord targets by 2050, this means an annual reduction of at least 7% for the next 30 years.

What these latest developments do show, however, is that change can happen very rapidly once better technology comes along, and these shifts look obvious after the event. We highlight the example of transport in New York: back in 1901, there were hundreds of thousands of horses pounding the streets and a photo from then shows a single anomaly in the shape of an early car. Just a decade later, however, this cheaper, cleaner and quicker transport solution had taken over and there was barely a horse to be seen – and we will see similar transitions from internal combustion engine vehicles to electric, and gas boilers to electric heat pumps.

Change can be non-linear and if you assume the future will look much like the present, you risk being very wrong. We believe it is important to focus on weaker signals, that single car-like thing in 1901, and imagine what if. All this leads to our Sustainable Investment philosophy, which is that most people underestimate the power and predictability of positive trends and the growth prospects of sustainable companies aligned with them.

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Friday, November 20, 2020, 11:45 AM