LOIM tube
Ice cubes, burning logs and the road to net zero: Episode 1
Investing in the climate transition requires stepping beyond carbon-footprint analyses and gaining a clear sight of companies’ decarbonisation trajectories. By doing so, investors can judge whether businesses are transition opportunities to be captured or risks to be avoided.
With this forward-looking view, we believe that some of the best net-zero opportunities exist among companies whose current emissions would exclude them from low-carbon strategies but, due to their action on achieving carbon-reduction targets, indicate that they are on viable decarbonisation pathways. Their potential to thrive in a world aligning to – and achieving – net zero could be underpriced by the market.
We define these transition opportunities as ‘ice cubes’ because their progress on reducing emissions is helping to cool the economy. In direct contrast, what we define as transition risks or ‘burning logs’ are the heavy emitters with no apparent plans to decarbonise. They are doing nothing to advance the transition and will likely become casualties at or on the way to net zero.
In the first episode of our new podcast series on ice cubes, burning logs and the road to net zero, Head of Sustainable Investment Research Strategy and Stewardship Chris Kaminker and Head of Sustainability Research Thomas Höhne talk about the impact of climate change on the economy and the investment implication of carbon-intensive industries that are engaged in decarbonisation.
Head of Sustainable Investment Research Strategy and Stewardship Chris Kaminker: “There is a very interesting class of companies that have high carbon footprints, but are decarbonising.
“We call them ‘ice cubes’ because they are significantly reducing global warming and because they have the effect of cooling down the economy.”
Source: LOIM
Head of Sustainability Research Thomas Höhne: “It's taken us about 50 years to double our emissions to where we are today. Now, to achieve some of the key objectives of the Paris agreement, we have actually need to cut our emissions by approximately half within a decade.
“So all of these emissions, all of these structural economic changes we've made over the span of 50 years, we now have to reverse in the span of only 10 years. That should tell you something about the breakneck pace at which this transition is going to need to evolve over the next few years.”
To find out more about ice cubes, burning logs and the road to net zero, listen to the full episode below.
Top three takeaways for investors• The greatest positive impact on decarbonisation is destined to come from companies that are currently high emitters and that have the commercial need and financial resources to transition to a much lower level of emissions in the future. |
important information.
This podcast is a marketing communication and has been issued by Lombard Odier Funds (Europe) S.A. a Luxembourg based public limited company (SA), having its registered office at 291, route d’Arlon, 1150 Luxembourg, authorised and regulated by the CSSF as a Management Company within the meaning of EU Directive 2009/65/EC, as amended; and within the meaning of the EU Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD). The purpose of the Management Company is the creation, promotion, administration, management and the marketing of Luxembourg and foreign UCITS, alternative investment funds ("AIFs") and other regulated funds, collective investment vehicles or other investment vehicles, as well as the offering of portfolio management and investment advisory services.
Lombard Odier Investment Managers (“LOIM”) is a trade name.
This podcast is provided for informational purposes only and does not constitute an offer or a recommendation to purchase or sell any security or service. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful. This podcast does not contain personalized recommendations or advice and is not intended to substitute any professional advice on investment in financial products. Investments are subject to a variety of risks. Before entering into any transaction, an investor should consider carefully the suitability of a transaction to his/her particular circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. Past performances is no guarantee of current or future returns, and the investor may receive back less than he/she invested. This podcast is the property of LOIM and is addressed to its recipients exclusively for their personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any other purpose without the prior written permission of LOIM. The contents of this podcast are intended for persons who are sophisticated investment professionals and who are either authorised or regulated to operate in the financial markets or persons who have been vetted by LOIM as having the expertise, experience and knowledge of the investment matters set out in this document and in respect of whom LOIM has received an assurance that they are capable of making their own investment decisions and understanding the risks involved in making investments of the type included in this podcast or other persons that LOIM has expressly confirmed as being appropriate recipients of this podcast. If you are not a person falling within the above categories you are kindly asked to either return this document to LOIM or to destroy it and are expressly warned that you must not rely upon its contents or have regard to any of the matters set out in this podcast in relation to investment matters and must not transmit this podcast to any other person. This podcast contains the opinions of LOIM, as at the date of issue. The information and analysis contained herein are based on sources believed to be reliable.
However, LOIM does not guarantee the timeliness, accuracy, or completeness of the information contained in this podcast, nor does it accept any liability for any loss or damage resulting from its use. All information and opinions as well as the prices indicated may change without notice. Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States of America, any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a United States Person. For this purpose, the term "United States Person" shall mean any citizen, national or resident of the United States of America, partnership organized or existing in any state, territory or possession of the United States of America, a corporation organized under the laws of the United States or of any state, territory or possession thereof, or any estate or trust that is subject to United States Federal income tax regardless of the source of its income.
Source of the figures: Unless otherwise stated, figures are prepared by LOIM.
Although certain information has been obtained from public sources believed to be reliable, without independent verification, we cannot guarantee its accuracy or the completeness of all information available from public sources.
Views and opinions expressed are for informational purposes only and do not constitute a recommendation by LOIM to buy, sell or hold any security. Views and opinions are current as of the date of this podcast and may be subject to change. They should not be construed as investment advice.
No part of this material may be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorised agent of the recipient, without Lombard Odier Funds (Europe) S.A. prior consent. In Luxembourg, this material is a marketing material and has been approved by Lombard Odier Funds (Europe) S.A. which is authorized and regulated by the CSSF.
©2022 Lombard Odier IM. All rights reserved
