Deirdre Cooper

Sentiment towards decarbonisation has weakened in recent years, but underlying earnings performance has remained resilient. High-quality enablers of the energy transition have continued to deliver strong, above-market earnings growth, even as valuations compressed amid policy uncertainty and higher interest rates — creating what investors see as a compelling entry point.

“Sentiment may have faltered over the past few years, but earnings have not,” said Deirdre Cooper, Head of Sustainable Equity. “High-quality enablers of decarbonisation have continued to deliver strong, above-market earnings growth, even as valuations compressed amid policy uncertainty and higher interest rates.”

Recent months have seen a recovery across clean-tech markets. While some lower-quality companies may simply be rebounding from oversold levels, others are demonstrating a more durable path to long-term value creation. Improving sentiment has been driven by structurally rising power demand in developed markets — particularly from data centres and industrial electrification — alongside accelerating, cost-driven adoption of clean technologies in emerging markets.

“What we saw in 2025 was an energy transition increasingly driven by economics, technology and efficiency gains, rather than policy cycles,” Cooper said. “We expect this shift to continue this year and beyond, with the clean-tech market projected to triple in value to >US$2.1 trillion by 2035.”

An accelerating transition with new growth engines

The energy transition continues to advance, but its drivers are evolving. Emerging markets are now a central force, with clean technology reaching cost parity — or better — with fossil alternatives across much of the developing world.

“The energy transition is still on, and it is accelerating in new ways,” said Cooper. “Emerging markets have become the growth engine of the transition.”

China’s scale and cost leadership in solar, wind, batteries and electric vehicles is reshaping global adoption patterns, enabling countries to electrify and industrialise more cleanly and affordably. Nearly half of China’s clean-tech exports now go to emerging economies, accelerating deployment across markets such as India, Thailand and Brazil.

Cooper continued: “Emerging markets are transitioning not primarily due to policy, but because clean technology makes economic sense.  China’s scale and cost leadership in solar, wind, batteries and electric vehicles are transforming access to affordable clean energy across the developing world.”

Developed markets face rising power demand and efficiency needs

In parallel, developed markets are experiencing a sharp inflection in electricity demand after decades of flat consumption. Artificial intelligence, data centres, electrified heating and cooling, and industrial reshoring are driving a renewed focus on power generation, grids and efficiency.

Cooper continued: “This has turned utilities, grid operators and efficiency specialists into some of the most important enablers of the next economic growth wave. From Amazon to Coreweave, investors in AI datacentres are increasingly calling out access to power as the key bottleneck to delivering on their plans.”  This combination of rising demand and decarbonisation goals is creating significant opportunities for utilities, grid operators and companies enabling energy and industrial efficiency.

“With policy headwinds fading and fundamentals strengthening, we think developed-market clean-tech leaders have potential for a more sustained phase of growth than the broader market appears to believe as part of an all-of-the-above energy solution,” Cooper stated.

Technology expands the investable opportunity set

Advances in electrification and efficiency are broadening the scope of decarbonisation across the global economy. Today, more than 75% of final energy demand can be electrified, up from around 50% in 2000, creating new opportunities across industrial electrification, power semiconductors and energy-efficient infrastructure.  Cooper noted: “Efficiency is a critical lever both for reducing emissions and enabling new sources of power demand like data centres in an increasingly electricity short world. This creates opportunities for companies whose technologies enable smarter, cleaner and more efficient use of energy across industries.”

Beyond power and industry, innovation is also unlocking differentiated opportunities in areas such as precision agriculture, where targeted solutions can address emissions from food systems, which account for around 30% of global emissions.

Positioning for the next phase of the transition

Portfolio positioning reflects this evolving landscape, balancing defensive exposure with structural growth opportunities while increasing emphasis on emerging markets.  “Our focus remains on identifying companies with structural growth, durable competitive advantages and the ability to compound returns through cycles,” Cooper said. “The portfolio is balanced between defensive utilities that meet surging power demand in developed markets, and high-growth enablers of electrification, resource efficiency and indu

After a period where sentiment diverged sharply from fundamentals, markets may now be turning in favour of active investors.  “The ‘transition of the energy transition’ — from developed to emerging, and from policy to technology and economics — is creating new opportunities for high-quality decarbonisation solution providers,” Cooper concluded.

The post Sustainable Equities 2026 Outlook: Investing in an evolving energy transition appeared first on AdviserVoice.

Deirdre Cooper

Strategy seeks to capture the structural growth driven by decarbonisation

Ninety One, a global investment manager with $162 billion in assets under management^[1], announced that the California State Teachers’ Retirement System (CalSTRS), the largest educator-only public pension fund in the world, has awarded a $150m mandate to Ninety One’s Global Environment strategy.

Managed by Deirdre Cooper, Head of Sustainable Equity, and Graeme Baker, Co-Portfolio Manager, the $4.2 billion strategy is a high conviction, concentrated global equity portfolio that provides exposure to the multi-decade structural growth opportunity from decarbonisation, driven by the need to transition to net zero. The Strategy focuses on identifying businesses whose structural growth is driven by decarbonisation across three key pathways: renewable energy, resource efficiency and electrification. Investing in decarbonisation provides investors with leverage to long-term structural growth, a complimentary return profile lowly correlated to peers, and positive environmental impact by financing companies that are solving the world’s environmental challenges.

Kirsty Jenkinson, Investment Director, CalSTRS: “Our mission is simple, to secure the financial future and sustain the trust of California’s educators. We believe that Ninety One’s Global Environment strategy aligns with our commitment to deliver financial performance while simultaneously creating positive sustainability outcomes.”

Sangeeth Sewnath, Managing Director, Americas, Ninety One:“As active investors, we believe it is vital to invest for a world of change.  CalSTRS is a global leader in this space with an admirable commitment to sustainable investment and stewardship.  Ninety One’s Global Environment strategy’s unconstrained and focused approach, combined with a long-term investment horizon and active engagement, is a powerful way to invest in decarbonisation. It provides California’s educators with access to the structural tailwinds to participate in outperformance and real impact. This partnership is a meaningful step as we continue to build our footprint in North America.”

———-

Notes:
[1] as of 6/30/24

The post Ninety One’s Global Environment strategy awarded mandate from significant US asset owner appeared first on AdviserVoice.

Deirdre Cooper

The amount of electricity consumed by AI is forecast to exceed 85 terawatt hours annually within a couple of years, more than many small countries^[1]. The latest whitepaper by Deirdre Cooper, Head of Sustainable Equity, and Graeme Baker, Co-Portfolio Manager, Global Environment, ‘Powering the AI revolution: a superscale cleantech opportunity?’ ^[2] examines the resultant investment opportunities across renewable energy and energy-efficiency solutions.

AI has the potential to significantly change trends in electricity demand in developed countries. McKinsey and the US Energy Information Administration (EIA) expect a 38% increase in US power demand over the next two decades, a startling increase from the 9% increase seen over the previous 20 years.

Increase in 5-year energy-demand growth forecasts by US utilities

Source: NextEra Energy, 2024

Deirdre Cooper, Head of Sustainable Equity: “While AI could be powered by dirty energy in the short term, over the medium term AI power demand is likely to be met by renewables. This is partly because renewables continue to be the most economic option for new power generation, and most of the assets in the transmission queue are renewables, which is the critical bottleneck. In addition, the biggest investors in AI have been companies with strong commitments to net zero.

As a result, we expect stronger tailwinds for companies involved in delivering clean energy. There are also significant growth opportunities for providers of solutions that improve datacentre efficiency, specifically server and infrastructure efficiency.

Cleantech pricing headroom is growing

As demand for renewable energy increases, power purchasers are already becoming less price sensitive when negotiating offtake contracts. This gives pricing headroom to companies across the cleantech value chain, not just developers like NextEra Energy, Iberdrola and Orsted, but also renewable and battery equipment manufacturers like Vestas Wind Systems, Sungrow, and CATL.

Power delivery and datacentre efficiency are crucial

The biggest challenge for AI datacentres is electrical power, the maximum capacity in megawatts that a datacentre needs available to be able to operate. A typical co-location datacentre^[3[] needs 20-30MW, but a dedicated AI campus might need 100- 500MW. Graeme Baker, Co-Portfolio Manager, Global Environment: “We see an opportunity for companies that provide technologies and services that are crucial to solving this power challenge. For example, locating datacentres close to high-voltage transmission infrastructure can help. Consequently, developers with better sites – such as NextEra Energy, which has significant undeveloped land rights in good locations – are likely to see their competitive advantages strengthen.”

Demand for power has also resulted in an increased need for certain electrical equipment, including high-voltage transformers and switchgear. This has led to shortages, with lead times for some technologies now running to years. Cooper adds: “Given the power-supply challenges facing datacentres in an AI world, the demand for efficiency gains will drive structural growth for companies that provide relevant solutions, such as Schneider Electric and Delta Electronics,.”

Cooper concludes: “It is important to note that most of the forecasted new datacentres are yet to be built, so investors need to treat power-demand forecasts with caution. But if they are even half right, the growth of the market for decarbonisation solutions will accelerate rapidly, expanding the opportunity set for investors.”

Read the report.

——–

Notes:
[1] Scientific American, October 2023.
[2] Powering the AI revolution: a superscale cleantech opportunity?
[3] In a co-location datacentre, multiple companies/third parties rent space. An enterprise datacentre is owned/used by one company

The post Powering the AI revolution: a superscale cleantech opportunity? appeared first on AdviserVoice.

Deirdre Cooper

A new whitepaper, attached, discusses what a decarbonisation strategy benchmarked against MSCI ACWI can offer those with a diversified global equity portfolio, something different in terms of portfolio composition and return profile.

Summary

Efforts to cut carbon emissions are driving vast flows of capital, creating a major structural growthtailwind for select companies. The paper argues that an investment strategy focused on ‘decarbonisation’ has the potential to generate above-market returns and contribute to positive real-world impact.

The paper highlights the significant difference between the positions held in the Ninety One Global Environment Strategy and the MSCI ACWI, indicating that it may complement a global equity allocation and offer diversification benefits. The high-conviction, highly concentrated portfolio has historically generated alpha at different times to common equity styles, which can help to smooth an overall portfolio’s alpha through time.

The Ninety One Global Environment Strategy invests exclusively in leading climate-solutions companies, which are expected to benefit from a long-term structural growth tailwind as global efforts to cut emissions continue, focusing on three pathways to a low-carbon future: renewable energy, electrification and resource efficiency.

The Global Environment Strategy has little overlap with global equity benchmarks and has historically offered a differentiated return signature. The analysis provided here indicates that it can be a valuable addition to a core global equity portfolio.

Read the whitepaper.

By Deirdre Cooper, Head of Sustainable Equity, Graeme Baker, Portfolio Manager and Atul Shinh, Investment Director .

The post The role of Global Environment within a global equity environment appeared first on AdviserVoice.

Deirdre Cooper

Global Environment sees 70% of portfolio companies reduce their carbon intensity across Scope 1, 2, and 3 and 70% grow their carbon avoided in 2021

Ninety One, a global investment manager, has  published its fourth annual Global Environment Impact Report^[1], which provides its ‘sustainability attribution’ for every holding within the Global Environment portfolio – an assessment of each company’s contribution to a greener future and an appraisal of other environmental, social and governance (ESG) issues.

It has been a challenging 12 months for sustainable investing. However, the report highlights positive progress among the companies in the Global Environment portfolio, in terms of both carbon reporting and environmental impact which shows what can be achieved by focusing on sustainability with substance.

Deirdre Cooper and Graeme Baker, Co Portfolio Managers, Global Environment: “We have seen further improvements in portfolio companies’ reporting of carbon risk (Scope 1, 2 & 3 carbon emissions) and impact (carbon avoided). Over 95% of companies now report Scope 1 & 2 emissions, and the proportion of portfolio companies providing full carbon-risk reporting is now just over 50%. While carbon reporting is improving, we are seeing some meaningful restatements, particularly of Scope 3 emissions, where a change in methodology can result in very different emissions figures. This can make year-on-year comparisons between companies difficult. The fundamental and qualitative analysis of carbon data continues to be a vital overlay.

“Over the past year (i.e., FY2020 vs. FY2019), almost 70% of portfolio companies reduced Scope 1, 2 & 3 emissions intensity, and 70% increased their absolute carbon avoided – a measure of the extent to which a company’s products or services help to reduce emissions relative to the traditional alternative.”

The report also details the investment team’s engagements with portfolio companies, all of which provide products and/or services that contribute to sustainable decarbonisation.

“We continue to work towards improved carbon emissions reporting by our portfolio companies, with a focus on Scope 3 reporting, and towards all companies adopting science-based carbon-reduction targets.

“We have updated our appraisal against the EU taxonomy and continue to estimate that more than 40% of the strategy’s revenues are potentially aligned to the taxonomy (before applying the ‘Do No Significant Harm’ and ‘Minimum Social Safeguards’ tests). However, as we study the related data from the various external data providers and the handful of companies that have reported, it is becoming increasingly clear that there is quite a bit of room for interpretation in the taxonomy data. Therefore, it will be quite a while before we have consistent numbers across different companies. 17 portfolio companies (c.68%) currently have explicit carbon-reduction targets, and about 42% of portfolio holdings have targets approved by the Science Based Targets initiative (SBTi). This continues to be our key engagement focus.

“As investors, we don’t seek to appear ‘green’ by minimising our carbon footprint or maximising our ESG ratings. We aim to deliver ‘sustainability with substance’ through an externalities-based approach to research, examining the nonfinancial as well as the financial data and information, assessing each company’s performance in relation to all its stakeholders.

“That means deep research on the products and services that are helping to avoid carbon. It means studying, within our natural capital analysis, the company’s net zero plan and water data (imperfect though that currently is) and thinking about the company’s and its suppliers’ impact on biodiversity“, they note.

———

[1] Global Environment Impact Report

The post Sustainability with Substance: Ninety One publishes its Global Environment Impact Report appeared first on AdviserVoice.

Deirdre Cooper

Addressing institutional investors’ increasing focus on the risks of climate change, Investec Asset Management has launched the Investec Global Environment Strategy.

The strategy, which invests in public companies across the value chain that benefit from the trend towards decarbonization, is designed to assist institutional investors exploring investment around long-term portfolio decarbonization. By seeking out those companies that stand to benefit from the energy transition, the strategy aims to provide investors with exposure to a $2.5trn growth opportunity as the world’s power generation mix transitions and decarbonizes, together with a natural hedge against the unknown impact of climate change.

Portfolio managers Deirdre Cooper and Graeme Baker will run the strategy, with the support of Investec Asset Management’s broader investment team. At the core of the strategy’s investment process is a detailed analysis of the full carbon value chain together with a unique approach to identifying businesses whose products are contributing actively to the reduction of carbon emissions.

John Green, co-CEO, commented, ‘With the world now increasingly focused on the question of how to address climate change, we believe that positive investment action must play a more prominent role in facilitating the transition to a lower carbon economy.’

The strategy aims to address climate risk and decarbonization in three ways; first, by providing access to the investment opportunity represented by companies participating in the sustainable transition towards decarbonization; second, redressing the balance of structural underexposure to the enablers and beneficiaries of decarbonization; and finally, providing a means by which to measure and hedge against systemic carbon risk in portfolios.

Deirdre Cooper, co-Portfolio Manager, said, ‘The world has embarked on its third energy transition: a relatively rapid shift in favour of low-carbon energy. Electricity needs to take market share from all other forms of energy, as we electrify transportation and heating. As the world electrifies, solar and wind are set to become the dominant and far more economical power sources, growing from 0.2% of the world’s power generation mix in 2000 to 7% in 2017, and this could grow to 80% by 2050. Electric vehicles will dominate new car sales by the same time.   Investment is required in all the related value chain.

The strategy’s investment universe is selected from 700 companies with a total market cap of over US$5 trillion. Selection methodology comprises of a two-stage screen, measuring environmental revenues and measuring ‘carbon avoided^[1]’. This includes considering a company’s reported Scope 1 & 2 emissions as defined by the CDP, but also the indirect emissions from the companies’ supply chains and products and services once they are sold, or ‘Scope 3’ carbon, as well as carbon avoided. When compared with traditional equity universes, the resulting Global Environment universe has minimal to no overlap with traditional equity allocations such as the FTSE 100 or MSCI All Country World Index and has no exposure to the 100 companies identified as the world’s largest carbon emitters by Climate Action 100.

John Green, co-CEO, said, “Humanity faces an unprecedented challenge: to transition quickly to a carbon-free growth model, ultimately leading to a more sustainable world. Because of this, the case for investing in public companies that tackle climate risk is a mainstream investment priority.’

———

[1] This concept was first developed as part of the European Union’s Emissions Trading Scheme where heavy emitters were required either to cut their emissions or to buy carbon credits in the market from projects which avoided carbon.

The post Investec Asset Management launches Global Environment Strategy appeared first on AdviserVoice.