Tackling climate change and reaching far-ranging net zero goals are endeavors that feature a lot of moving parts, and those parts have implications for investors.
Whether it’s increased consumption of green metals for solar panels, lithium batteries, and other renewable energy products or chips to power related technologies, there’s a lot that goes into climate investing. In some cases, climate investing is comparable to environmental, social, and governance (ESG) strategies in terms of sheer mass, but some exchange traded funds are up to the challenge.
Perhaps to the surprise of some investors, that group includes the ARK Autonomous Technology & Robotics ETF (CBOE: ARKQ). ARKQ’s place in this conversation is deserved and shouldn’t be surprising because robotics can play pivotal roles in fighting climate change.
“With the emergence of climate focuses by end-users, we believe robotic solutions will be evaluated in a more holistic, ESG-centric fashion and viewed as tools to help accomplish climate goals. While most are still targeting big items like plane/truck usage, etc., robotic solutions are part of the equation to maximize output per unit of carbon. Newer companies who typically don’t think in these terms will be forced to do so much earlier in their journeys,” according to Cowen research.
Interestingly, some of the basic industrial robotics solutions currently in use in the e-commerce space — which is relevant to ARKQ investors because some of the fund’s holdings have exposure to that theme — can be used in improving climate outcomes.
“Our work suggests that if it is 100% deployed in the market using solar power as its energy source, this one application will reduce average annual carbon output over the 2022-2050 evaluation period by over 10MM metric tons. This is equivalent to 25+% of UPS’s total 2020 output and over 15% of Amazon’s,” added Cowen.
Another point solidifying ARKQ’s place in the climate conversation is that some robotics companies are already making ambitious climate-related commitments.
“An interesting extension of this result is that over 90% of robotics users surveyed have or plan to establish public climate commitments in 2022,” concluded Cowen. “We think it will be critical for robotic tech to be models of the solution as well. In other words, they would be sustainable in their own manufacture/operation. Most viewed their public commitments as highly formalized – something that feels inconsistent with anecdotal evidence and our conversations in the industry.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.