While 2020 and 2021 have been years of profound human suffering, and dramatic challenges, they have also reaffirmed the capacity of humans, governments, firms and markets to direct shocking amounts of resources to solve a global scale problem. We have faith in the ingenuity of humans and the power of free markets to meet the challenge of climate change head on and not merely survive but thrive.

The difference between an unstoppable trend and a trading opportunity is clearest when the market moves against your view. For an unstoppable trend, this creates a little discomfort for existing positions, and an attractive entry point for those who have sat on the sidelines through the last few years or who want to top up. In fact given the faster than expected run-up in green energy in 2020, the give back in 2021 is not a terrible surprise. Global warming is front and center making green energy and sustainability a key focus for investors.

While greening is an unstoppable trend, it is not a mature market. Thus, many potential opportunities for investment lie in private markets. Ambitious forecasts are being set and look conservative within a few years, with the International Energy Agency’s December 2019 forecast for renewable energy consumption looking starkly unambitious when compared to BP’s forecasts for business as usual and rapid transition that were published in May of this year.

We view the analogy of tech firms in and around the turn of the millennium as apt. Any forecasts for the amount of data produced, or the number of connected devices that were made in 1999 would have looked hopelessly outdated even a few years later. To us, the large differences in forecasts suggest that when a “tipping point” for green is reached, it will be seen in a rear view mirror.