Global energy crisis is a key investor opportunity
As international concerns heighten as the energy crisis deepens, investors should focus on the long-term future rewards in sustainable investments, as I told Financial Express, amongst other media outlets.
Earlier this week we saw the EU decided to proceed with a partial ban on Russian oil. This prohibits the purchase of crude oil and petroleum products from Russia delivered to member states by sea.
This followed on from reports of six million homes facing blackouts over winter with Russia threatening to cut the EU’s gas supply, and the UK government is now outlining plans for rationed electricity.
In addition, U.S. oil inventories are 14% under their five-year average; China has been grappling with its harshest energy crisis in 10 years; and in South Africa and elsewhere, rolling blackouts continue as supply cannot keep up with demand.
This global energy crisis isn’t going away. It’s only going to get worse. The crisis came about as the global economy rebounded from the Covid pandemic faster than forecast, highlighting supply and infrastructure problems.
Yet the impact of the rebound isn’t the only reason for the global energy crisis.
It’s not about the war in Ukraine either, which is ripping into supply globally.
Demand is also soaring due to a 1% annual rise in global population growth, as well as the increase in wealth and consumption of the expanding global middle class.
However, despite being a massive concern for households and policymakers, it’s also an opportunity for investors. Indeed, the international energy crisis should serve as a catalyst for the energy transition.
Of course, the situation needs to be dealt with globally in the short term, but it has brought to the fore that the long-term fix to this and future energy crises is to boost investment into sustainable projects that provide cleaner power.
As such, investors will be more eager to seek out the opportunities to earn profits with purpose as countries around the world strive to ease the environmental, economic and social fallout of the current situation.
Investors will want to move quickly to gain an early advantage, firmly focused on the intrinsic value of sustainable investing
We have long been committed to environmental, social and governance (ESG) values, and only last year became one of 18 founding signatories of a UN-backed Net Zero initiative, alongside the world’s two largest credit rating agencies, six major audit networks, three leading index providers, and two global stock exchanges to help speed up the move to a net-zero financial system.
We’re seeing the global energy crisis is a defining moment right now and it underscores a major investment opportunity to generate wealth with a purpose over the long-term.