Citi on ESG investments, green energy, renewables, cybersecurity

Large photo voltaic panels are seen in a solar energy plant in Hami, China on May 8, 2013.

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From green power to equal entry to training and know-how, traders can discover alternatives to generate profits by these “unstoppable trends,” says Citi.

Alternative and green power are “very productive right now” the place world developments are involved, mentioned Ken Peng, head of funding technique for Asia-Pacific at Citi Private Bank, throughout a digital media briefing on Wednesday.

“Governments from around the world from China to Europe to US are focusing on sustainable development and they are putting money where their mouths are,” he mentioned.

But the sector “ran a little too hot” in 2020, as traders went in with borrowed cash, he mentioned. In the months since January, traders received out of their positions and that market fell 40% by May.

Now, he mentioned, “I think this presents a very interesting opportunity to get on the bus for this trend that is likely to be with us for a good part of the next decade.”

David Bailin, chief funding officer at Citi Global Wealth, additionally mentioned that over the subsequent 5 to 10 years, traders — particularly youthful ones — will place an “enormous emphasis” on sustainable and accountable investing, and never simply focus on income.

They will have a look at how corporations deal with the surroundings, workers, and even politics will type a part of their funding determination, he informed CNBC on Tuesday. 

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He mentioned an important would be the “unstoppable trends” like local weather change and social justice, together with offering equal entry to training and know-how.

“All of those are areas that I think are going to have unusual growth in the next five to 10 years,” mentioned Bailin, who can be the agency’s world head of investments. “So these two things will converge and I think, create an opportunity for investors to make money by doing good.”

Such investments, often known as environmental, social and governance (ESG) investing, are on the rise. Last month, BlackRock told CNBC that ESG investments could reach $1 trillion by 2030. 

Cybersecurity as a part of ESG consideration

The capacity for corporations to cope with cybersecurity dangers can be a part of the entire ESG dialogue, Bailin mentioned. 

“In my mind, what you have is this unstoppable trend with the need for greater defense (that) causes higher spending in that area, that’s good for the people who manufacture this type of security and you can invest in those,” he mentioned. 

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Last month, Colonial Pipeline was hit by a cyberattack that pressured the corporate to close down roughly 5,500 miles of pipeline within the U.S., crippling gasoline supply methods in Southeastern states.

At the identical time, Bailin warned that such investments can have a “substantive risk.”

“Remember that cybersecurity also has a very significant military component to it,” he mentioned.

“It’s used not just by corporations for ransom, but by the military to actually take down infrastructure in their adversaries,” he added. “So for us, it’s an area of continued concern, heightened concern — but also an area that’s actually investable.”

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