Year Ahead 2024: Deep dive on protecting and growing your wealth (7:58)
A shifting backdrop may call for portfolio changes. Listen in to CIO’s Adrian Zuercher and Jon Gordon.

Year Ahead 2024: Deep dive on private markets and private credit (7:31)
CIO's Dan Scansaroli and Karim Cherif on our latest on positioning in private equity and credit.

Thought of the day

The 28th United Nations meeting on climate change (COP28) kicks off on Thursday, with scientists warning that the world is not on track to avoid the worst impacts of global warming. Preparatory talks throughout the year have failed to achieve consensus on how to address these concerns.

A key item on the agenda is the proposal to triple renewable energy spending and double energy savings by the next decade. Yet following surges in energy prices in 2022, governments also remain focused on improving affordability, reliability, and the resilience of energy supplies. The immediate remedy has been increased consumption of coal. Global fossil fuel subsidies topped USD 7tr last year, equivalent to about 7.5% of GDP and exceeding government spending on education (4.3%), according to the IMF, which also estimates that scrapping these subsidies would prevent 1.5mn premature deaths globally.

But while challenges remain, we still expect greater momentum toward reducing emissions over the coming years. Achieving net-zero targets will require adopting green technologies and investing in power generation, energy infrastructure, transport, industry, buildings, and heating and cooling systems. We think investors will benefit the most through exposure to a number of these themes given the different stages of development across countries and sectors.

Global solar capacity is on track to triple in the coming years from the current 1,000 GW, increasing the share of renewables in the global power mix. The share of renewables in electricity generation has already risen from 20% to 30% over the past decade. Investors can tap solar opportunities through diversified exposure to greentech, long-term exposure to the energy efficiency value chain, or more concentrated exposure to smart energy solutions.

We expect electrified vehicles (including battery electric and hybrid) to make up around 30% of global auto sales by 2025 and more than 60% by 2030, driven by incremental technological developments. The electric vehicle value chain is integral to greentech investment themes, especially in Asia and Europe.

Decarbonizing the heating and cooling systems of buildings and factories will require strong emphasis on energy efficiency investment. When the limits of hardware are reached, software can often be used to enhance energy efficiency. This opens up opportunities for companies that gather digital data and provide enabling technologies.

So, we believe efforts to address climate change will gain ground, with a growing focus on the problem from governments, companies, investors, and consumers. Beyond public markets, investors can tap into energy disruption opportunities in private markets, including in renewable infrastructure development, energy networks, storage, carbon capture, energy efficiency, and circular economy solutions. Such private market opportunities, however, are only appropriate for investors able and willing to tolerate lower liquidity and other risks.

For more details on these ideas and more, click here for our Year Ahead 2024: A new world(PDF, 3 MB).