Investing in funds that capitalize on Europe's intense summer heat could yield profitable results: MIDAS SHARE TIPS' Recommendations
In the face of escalating global temperatures and the need for sustainable solutions, investors are increasingly seeking exposure to climate-related businesses. This article explores investment opportunities in the sectors of air conditioning, building and adjusting homes and offices, and agriculture & pest control.
One key area of investment is energy-efficient building upgrades and climate-resilient infrastructure. For instance, Portland's Climate Investment Plan earmarks funding for energy-efficient upgrades that make buildings safer and more comfortable during extreme heat, a climate adaptation related to air conditioning and building adjustments.
Climate-smart agriculture and pest control is another focus, with investments aimed at sustainable, low-emission agricultural practices and technologies that improve crop resilience and minimize environmental impact. Lebanon's long-term development strategy highlights fostering investments in climate-smart agriculture, which would include pest control innovations aligned with sustainability goals.
Global climate finance is rapidly expanding, with private climate finance exceeding $1 trillion in 2023, often channeling capital into clean energy, sustainable infrastructure, and resilient agriculture. While specific fund names are not detailed, private climate-oriented ETFs, green bonds, and impact funds frequently target these sectors.
Investors should look for impact or ESG funds emphasizing energy-efficient building technologies, climate-resilient infrastructure, and climate-smart agriculture. Examples to explore include funds investing in energy-efficient HVAC systems and building retrofits, ETFs or mutual funds specializing in green real estate and sustainable infrastructure, and agricultural technology funds focused on climate-smart farming and integrated pest management solutions.
The UK air conditioning market is expected to grow at 6.3% annually and be worth £1.7 billion by 2034, making it an attractive investment area. Leading brands like Johnson Controls and Carrier are benefiting from the air-conditioning boom, with shares up by 33% and 10% respectively this year.
Investors can also consider funds such as Ninety One Global Environment, which gives exposure to building new homes and offices that can withstand tougher temperature shifts. Key holdings of Ninety One Global Environment include Autodesk, a design business whose software is used to make more sustainable buildings, and Schneider Electric, a French 'smart' building systems company.
An alternative to buying individual shares is to hold a fund that contains them, such as First Trust's exchange-traded fund (ETF), Nasdaq Clean Edge Smart Grid Infrastructure. Darius McDermott recommends Ninety One Global Environment for those shifting portfolios towards climate resilience.
Investors should note that buying shares in these businesses individually comes with tax implications and currency fluctuations. Another fund option is Impax Environmental Markets, which recently took a stake in Aaon, a company that makes heating, ventilation, and air-conditioning systems for businesses.
Approximately 5% of British homes have air conditioning, with the number predicted to rise. However, some companies in the sector have faced challenges. For example, Rentokil, a pest controller, has struggled due to issues in the US, with its shares down by nearly a third (31%) over five years and by a quarter over three years. STS Global Income investment trust bought Rentokil last November, viewing it as a high-quality global asset at a low valuation.
Innovation Agritech, a company specializing in vertical farming using aeroponic systems that use less water, could be useful in a warmer world and for improving food security in Britain. However, trading shares in Innovation Agritech is only possible if a buyer or seller can be found, and there is much less regulation, making it an investment for the brave.
As the heatwave in Britain marks the hottest June on record, the need for climate-resilient technologies becomes increasingly apparent. Stewart Investors Asia Pacific Leaders fund, with Mahindra & Mahindra as its top holding, could be of interest to agriculture investors. The company provides microirrigation solutions, herbicides, fungicides, and seed potatoes to help crops withstand warmer temperatures.
In conclusion, investing in climate-resilient technologies offers numerous opportunities for investors. By focusing on energy-efficient building technologies, climate-smart agriculture, and pest control, investors can contribute to a more sustainable future while potentially generating returns. However, as with any investment, it is crucial to conduct thorough research and consider the risks involved.
- Climate-resilient infrastructure, such as energy-efficient building upgrades, is a key investment area for those seeking exposure to climate-related businesses, as seen in Portland's Climate Investment Plan.
- Climate-smart agriculture and pest control, focusing on sustainable practices and technologies, are crucial investments for fostering agricultural resilience, as highlighted in Lebanon's long-term development strategy.
- Global climate finance has seen a rapid expansion, with private climate finance surpassing $1 trillion in 2023, and funds like Ninety One Global Environment focusing on building technologies, climate-resilient infrastructure, and climate-smart agriculture are worth investigating for investors.
