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Three defining areas for investors in 2021

5 January 2021

Climate change, technology and energy transition will define 2021 for investors, according to Claudia Quiroz, lead portfolio manager of Quilter Cheviot’s Climate Assets Fund.

Quiroz said 2020 saw the public narrative shift away from the environment and social and governance consideration came to the fore as investors watched how businesses responded to the Covid-19 pandemic. It was also the year of “trend acceleration” particularly around technology, as the pandemic forced people online and working from home became the norm.

Quiroz believes the two trends of technological transformation and climate awareness will collide in 2021, with technological innovation set to move up a step further on the path to net zero by 2050.

Quiroz says: “Climate change will become the key sustainability priority for 2021, underpinned by US President elect Joe Biden’s support for net zero and the European Union’s Green Deal. The UK government will host the UN’s Climate Change Summit in Glasgow later in the year and Boris Johnson has promised a decisive and permanent shift away from fossil fuels through a green industrial revolution.

“Green revolution starts with technological evolution and in the race to net zero technology will play a key role. Take big data, data analytics and artificial intelligence for example, they have become a new resource for the world we live in and alongside automation and robotics, companies in cloud technology and the internet of things will continue to support the new way of working – agile, flexible and sustainable.”

However, Quiroz warns investors to remember the importance of business fundamentals when it comes to sustainable investing.

Quiroz adds: “In 2021, it will be more important than ever for investors to understand which firms are taking real action rather than just promoting their green credentials. Furthermore, high quality companies will continue to not only be required to have a sound business model, a strong balance sheet and stable earnings, but also to demonstrate how being a responsible business in terms of environmental, social and governance considerations is embedded within the corporate culture.

“We take reassurance from the breadth and scope of our ESG discussions with the companies we invest in and huge strides have been made in company transparency over the last five years. Ultimately, climate change and technology will lead our thinking and underpin our investable universe in 2021.”

Professional Paraplanner