Decarbonization efforts have led to global impact investing becoming a $1 trillion market. But getting to net zero by 2050 will require tremendous, rapid change and large-scale technology deployment across multiple industries. It will also create opportunities to build new businesses.
According to a report from McKinsey, reaching net zero by 2050 could mean a 60% increase from current levels in capital spending on physical assets. The required investments amount to $9.2 trillion per year until 2050, of which $6.5 trillion annually would go into low-emissions assets and enabling infrastructure.
McKinsey also estimates that growing demand for net-zero offerings could generate more than $12 trillion of annual sales by 2030 across multiple sectors, including transport ($2.3 trillion to $2.7 trillion per year), power ($1 trillion to $1.5 trillion), and hydrogen ($650 billion to $850 billion). These decarbonization efforts will fundamentally change the global economy. It will also “create significant growth potential for climate technologies,” according to McKinsey.
Investors wanting to invest in this growing megatrend of decarbonization may want to consider the actively managed Neuberger Berman Carbon Transition & Infrastructure ETF (NYSE Arca: NBCT). Launched in April, NBCT seeks to invest in companies that are focused on or are transitioning their business to focus on one or more of the following themes:
- Low-carbon resources: issuers focused on producing renewable energy, such as solar, wind, geothermal, and green hydrogen, and the related storage and transport of these energies.
- Electrification: issuers that help enable the replacement of technologies that use higher carbon-emitting fuels with those that use low-carbon resources as a source of energy, including those that support smart grid and electric vehicle-charging solutions, as well as electricity transmission and distribution that helps expand usage of low-carbon solutions.
- Carbon reduction solutions: issuers that directly facilitate the carbon reduction goals of infrastructure owners, including innovative raw materials, industrial gases, engineering and construction service providers, environmental services providers, and environmental technology providers.
Neuberger Berman managed $18 billion in thematic equity investments for global clients as of December 31. Its ETFs are designed to broaden access for individual investors and their advisors.
“We feel that thematic investing, which is forward-looking in nature, can benefit from the adaptable forecasting abilities of active managers,” said Neuberger Berman ETF specialist Fred Edwards.
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