The development of modern industrialized nations did not follow a linear course but was instead characterized by a number of quantum leaps forward. For example, the invention of the railway enabled people to rapidly inhabit previously undeveloped regions of the US. At the start of the 21st century, we are once again poised for a similar leap forward, which will be driven by billions of affluent consumers - particularly in Asia.
The expansion of this new middle class reflects the dynamic growth of the global population: it took millions of years for the world population to reach 1 billion in 1804 and a further 123 years for it to grow to 2 billion. However, it reached the 6 billion mark in 1999 after just 72 years, which means that by 2050, the world population will probably exceed 9 billion.
A combination of immense population growth and rising incomes is accelerating the consumption of natural resources and energy but is also leading to increasing urbanization and industrialization - a trend that experts believe will create an enormous need for innovation and adaptation. In today's established economic areas in Europe and the US, 90% of the population lives in cities, compared to around 50% in 1920.
A similar development is expected in Asia, where only around 40% of the population lives in urban areas. Urban living leads to serious changes in behaviour - particularly when combined with rising incomes. The trend towards urbanization is closely linked to growing industrialization and therefore tends to have negative external consequences such as an increased impact on the environment. These external effects are tolerated in less developed societies. However, levels of tolerance and attitudes towards issues such as environmental protection alter as living standards improve. This creates chances for companies that can profit from supply bottlenecks and seize new opportunities for sustainable innovations and technological advances.
Which areas offer earnings potential?
Investors can benefit from very attractive earnings prospects in view of the diverse challenges that need to be resolved in the area of clean technologies. In this context, it is possible to distinguish between five groups of companies at different stages of the value chain that offer excellent potential:
Life cycle management (waste management and recycling) Life cycle management is a key area that focuses on the development of improved product life cycle concepts. Proactive companies already take account of issues such as waste management and the recycling of products in the product development stage.
Innovative industrial companies Innovative industrial companies improve the input/output relationship of a process. Clean and efficient production processes can lead to a reduction in the consumption of energy and materials, for example, while simultaneously increasing productivity.
Construction of low-energy homes Houses and apartments account for the largest proportion of water and energy consumption globally. All of the companies included in the fund supply technologies and materials that reduce environmental impacts during the life cycle of a home. This begins with the choice of location, design and selection of materials, includes the construction, running and maintenance of the home, and ends with its demolition. The goal is to create zero-energy housing.
Transport and logistics that generate lower emissions Transport and logistics are also areas that are responsible for a large proportion of global emissions and pollution. The companies included in the fund offer innovative solutions and technologies in order to connect the globalized and increasingly integrated world through enhanced logistics and time-saving forms of transport that use fewer resources and emit low levels of pollution.
Clean water and clean energy Clean water and clean energy make a significant contribution towards reducing the negative impacts of human activity on the environment. Rather than targeting a reduction in the consumption of resources, the main focus here is on the reduction of emissions and pollution as well as on cleaning technologies.
Farsighted investors focus on global change
Traditional financial instruments don't always offer direct access to the investment theme of 'global change' because they are geared towards conventional sectors and regions. The only way to make global change accessible to investors is to select companies from the global universe of over 40,000 firms and to bundle them in a theme fund. In the case of the Vontobel Global Trend Clean Technology fund, a large number of specialists continuously analyze and re-evaluate the defined investment universe with the aim of identifying companies that have the innovative strength to develop new technologies and solutions in response to future challenges. Farsighted investors who recognize new trends at an early stage and understand the investment opportunities offered by global change will be able to benefit from the positive economic momentum resulting from advancing urbanization and industrialization.
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