Market, sustainability and potential for 2023

If 2022 represented the year of the definitive ecological turning point of the world economy (or of the effective awareness of the problem), 2023 could instead be the year of a significant acceleration of this green current, with potential margins of return for investors who choose to place it in their portfolio.

Provided that the cracks caused by Covid in economies, societies and environmental ambitions remain under control (but are widening). This is what Andy Howard, global head of sustainable investment at Schroders argues, concerned by the fact that - looking to 2023 and beyond - the debt inherited from the pandemic limits the ability of governments to support companies in difficult times. In this context, according to the expert, companies will play a greater role in tackling crucial issues: from climate challenges to threats to biodiversity, up to the cost of living crisis. In summary, he underlines, the future looks very different from the past.

To help investors better weigh their strategies, Howard has identified 5 trends to monitor in 2023 in the field of sustainable investments. The first is climate change, which is an inevitable issue and to which all investors are exposed, but also political and economic actions aimed at addressing its causes. That’s why, they are risks that must be evaluated and managed together with the opportunities offered by the solutions. The second trend concerns the central role of natural capital and the threats to biodiversity. These are a sign of the structural tensions between the growing demand for a larger, richer and hungrier world population, and the planet’s limited resources.

Today, resources equivalent to those provided are being consumed, pushing us ever further towards a natural capital deficit and intensifying the threats of degradation to ecosystems. It is estimated that approximately $10 trillion in natural capital value is lost each year, with hidden liabilities mounting in the global economy. As a result, nature risk is rapidly becoming an integral factor in investment risk and returns. The green turnaround and the search for sustainability also have a strong impact on the cost of living and on the social side.