Authored by: Liqian Ma

Scarcity in an Age of Disruption: Five Sustainability Themes for Investors to Embrace

We live in an age of extraordinary technological abundance, but the global economy is increasingly running short of some of the most fundamental components to function and thrive: reliable power, stable supply chains, skilled workers, clean water, and a predictable environment. However, there are opportunities for investors to embrace within these scarcities, and through a better understanding of existing exposures and intentional investing in solutions across asset classes, those that act now will be better positioned to add long-term resilience to portfolios.

2025 Outlook: Diverse Manager & Impact Investing

We expect California Carbon Allowances (CCAs) to recover from 2024 losses as clarity on supply reductions emerges. Meanwhile, impact private investment flows will favor strategies with faster distributions and commercial validation. Additionally, headwinds for private diverse manager allocations should ease, but the overhang of emerging funds may lead to consolidation or shutdowns, challenging managers.

The Other E in ESG Accelerates: Engagement by Shareholders

In the midst of heightened awareness of systemic risks in climate change and social inequality, many investors concerned about long-term portfolio resilience have used their voice to seek change that benefits all investors and the broader system. We expect investors will adopt active engagement practices to a greater extent in 2022, assuming significant policy changes around climate and social issues do not materialize. 

Outlook 2021: A Year of Healing

As 2020 comes to a close, we expect some key investment drivers to persist into next year. While our views speak to many different challenges confronting investors, including the poor bond yields on offer, the fate of US-China relations, and where to find growth, they are rooted in the belief that 2021 will be a year of healing for the global economy.