Today the world has committed to succeed with Energy transition. Simultaneously the 'commodity transition' has started. The role and the types of metals feeding our energy for the future requires a new and responsible investment strategy which aim also to contribute to the integrity of financial markets.
From final product to raw material, the aim will be to control CO2 emissions, transparency and ESG impacts along the value chain, while tending towards increasingly short and sustainable circuits, reducing the need for primary resources.
The following video depicts broadly the situation and for some of us would let appreciate the major impacts to handle.
Sustainability and ESG integration change the view of investors which are pushed to appreciate long term issues, at the expense of that well-established and resistant short-term thinking. The long-term thinking is on its way while quarterly earnings guidance is less reported by companies.
Financial markets shifting towards longer term returns is taking place gradually. This change can be effective if strict rules are applied in the financial sector and all its players become stakeholders in this change.
Responsible Investors have expressed their commitment to report in line with TCFD recommendations.
The expected transition to a lower-carbon economy is estimated to require around $1 trillion of investments a year, generating new investment opportunities. However, climate-related risks affect a wide range of asset classes and therefore longer-term strategies and most efficient allocation of capital must be considered.
Supply chains are not considered as an investment case, but their actors impact significantly on GHG emissions (Scope 3 Emissions), their transparency issues affect some critical ESG disclosures, as raw material sourcing or human rights respects.
Some OEM's have started to consider vertical integration motivated by ESG materiality and/or technological innovations from companies adopting coherent sustainable approach. The trend is promised to reenforce in the future offering investment opportunities.
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