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We must reset the economic balance to tackle the environmental challenges our planet is facing. There is no doubt that finance is critical to accelerating the transition towards a net-zero and nature-positive economy. Many underestimate the speed and scale at which this transition is unfolding. At holistiQ we aim to capture these opportunities that are already profoundly changing our investment landscape.
 

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Economic transformations are accelerating through a set of market tipping points

Green technologies and solutions are crossing tipping points and have significant potential to scale. Plummeting cost curves, supportive policy winds, and changing societal preferences are all acting at the same time. This accelerates change, moving us from a linear to an exponential path.

Our Energy systems will be electrified; we will re-value Nature's assets to incentivise careful management of our land and oceans; and we will shift to a circular use of Materials. Broader enablers such as technology and the pricing of externalities, with carbon markets in the lead, are supercharging these transformations. We call these chapters ‘3+1’ .

We will see these 3+1 systems transformations across our economy, creating powerful feedback loops as sustainability gains in one system generate new opportunities for net-zero and nature-positive solutions in others. The widespread deployment of renewable energy will be at the heart of many of these interactions, bringing the potential not only to drive efficiency gains across the energy system, but to change the way we produce food, manage scarce water resources and rebuild natural capital.

Strong regulatory and policy action, rapid cost reductions, and the pricing-in of externalities will accelerate the transition. There will be a massive redeployment of capex – profit pools will shift fundamentally and permanently.

1. Energy systems
the race to net zero

Our current energy system is fossil-fuelled, centralised, uni-directional and dirty. But renewable, sustainable technologies have emerged. Costs are falling fast – adoption is rising fast. With peak fossil fuel demand expected globally within the next 3-4 years, we are shifting at speed and scale to a system that is electrified, decentralised, multi-directional, efficient and clean. Not due to ideology, but due to economics. It’s a familiar pattern. As the efficiency, affordability and accessibility of new technologies improve, market tipping points are crossed. And once crossed, there is no going back.

Our energy supply will be decarbonised. With coal and gas plants becoming less competitive, production from renewables and other low-carbon sources is ramping up.

Our energy demand will be greened, as we electrify buildings, transport and industry. This will create significant improvements in energy productivity and efficiency, which could translate to overall energy demand dropping by more than 15% by mid-century.

And supply and demand will be balanced by new, flexible energy systems that integrate storage and make the power grid an intelligent, optimised network.

We will move from 20% electrification to 70%, transforming forever the way we produce, distribute and consume power. By 2030 we will invest more than USD 24 trillion of capex on electrification globally. New profit pools will arise in demand-side electrification, in the accelerating rollout of renewables and storage, and in the infrastructure that will make it all work.

2. Land and oceans
nourishing the planet within planetary boundaries

Our wasteful food systems are putting unprecedented pressure on our planetary boundaries. Deforestation, freshwater overuse, chemical pollution, and biodiversity loss are being driven by our need to feed a population that is expected to grow to over 9 billion people in the coming decades.

Sustainability transitions across the food system will relieve this pressure, freeing up vast areas of agricultural land to be restored to nature, improving fresh-water management and allowing our sea-life to recover. Significant new profit pools will emerge as three key changes unfold – we will see a dietary shift in the food we eat, we will produce food differently, and we will distribute food more efficiently.

Understanding the transformation of food systems requires analysis that incorporates both the direct economic and environmental impacts, and the broader social, cultural and health dimensions. The cost of alternative proteins is expected to fall rapidly – consumers will continue the shift towards healthier and more plant-based diets. New farming practices will be driven by policy and the clear benefits of improving yields, soil health regeneration, biodiversity gains, reduced input costs and new-found resilience to the threat of pests and a changing climate. In more and more geographies, we will price water as a key economic input, both for agriculture and for other water-dependent sectors.

We will also place greater economic value on nature itself. Entire new asset classes will emerge that will incentivise landscape regeneration and preservation. In particular, investing in forest frontiers across the tropical belt can deliver both high returns and immense impact on the ground, delivering on growing corporate demand by scaling access to sustainable commodities and high-quality carbon removals. Forests are the foundation of our natural systems on Earth – home to 80% of the world's biodiversity, providing essential services to more than two billion people and storing colossal amounts of carbon, critical to limiting global warming.

3. Materials
making more with less

For the last 50 years, economic growth has been tied to material consumption. Yet as we continue to extract and process more and more, we harm the very environment on which our economy relies.

Global resource extraction and processing, including fossil fuels, accounts for 90% of biodiversity loss and water stress – and contributes massively to GHG emissions. Four key materials are responsible for much of this harm: plastics, cement, steel and aluminium. The answer? Circularity.

Creating a truly circular economy means we can decouple production from primary resource consumption and avoid waste and pollution. By using alternative or renewable materials, optimising production, improving the lifecycle of materials and turning old materials into new, we can move towards an economy that does more with less – and generate profits in the process.

New profit pools are emerging with the rise of a circular bio-economy that offers renewable bio-based alternatives to the materials we use today. Alternatives such as nanocellulose made from wood pulp, that can be up to five times stronger than steel; or ‘new plastics’ made from plants or algae, that can be recycled more efficiently, or biodegrades easily at the end of life.

At the same time reuse, repurposing and recycling will maximise the useful life of extracted resources, such as recycled cement recovered from end-of-life concrete, and advances in battery recycling that can recover 80% of the lithium, and nearly all the cobalt and nickel, from used batteries.

In many of these we are approaching tipping points, as processes become commercially available due to technology improvements or the falling cost of renewable energy. In other instances, these tipping points are precipitated by policy, such as the commercial incentives created by EU restrictions on some single-use plastics.

And investors can be at the heart of this change. Innovations in technology and infrastructure will be key. Significant capex investment is needed. Already system-level solutions are moving at pace along the innovation curve as investors deploy capital, positioning to benefit from powerful market forces.

+1. Pricing externalities
enabling the transition

The rise of both new and established means of pricing externalities will be an important enabler of the transition – and offer compelling investment opportunities. For too long there has been a fundamental market failure at the heart of our economy. The true price of doing business – the damage caused by emissions or pollution, including the impact on human health – has been absent from the cost of goods or services.

Carbon markets are leading this essential market correction. Projected to rise in value, carbon markets will push companies to adopt reduced and net-zero emissions business practices. By the 2040s, as carbon markets grow and carbon prices increase, we will start to scale the value chain for carbon removals (CDR) to over 5 GTs per year, the equivalent of the USA’s entire annual CO2 emissions, potentially creating a new business as large as the oil & gas sector today. Just as today’s materials systems are decoupling from extraction, so economic growth is being decoupled from emissions.  

The transition will also be underpinned by sector-agnostic physical and digital solutions that will facilitate change across our entire economy. New technologies will be critical, such as blockchain product tracking that will ensure supply chain transparency, and smart-grid software that will boost efficiency in our energy grids and incentivise adoption of electric vehicles. Identifying and understanding these economy-wide horizontal enablers, that can be deployed wherever the transition takes us, will offer significant investment opportunities.

Reshaping the investment landscape

In the face of this fundamental rewiring of the global economy, relying on today’s investment outlook is not an option. The coming changes will create cascading impacts across sectors, bringing both risks and opportunities that can only be understood through systems thinking. With sustainable technology inflection points approaching fast, investors must get ahead of the curve. 

We leverage partnerships across science, academia and industry to gain a deep understanding of how transitions are taking place both within and across sectors, how technology is driving change and how value chains are being disrupted. With a focus on both public and private assets, we seek out the ‘green bets’ where new opportunities will emerge, including in nature as an asset class in itself.

We maintain essential insight into policy, ready to react to major public initiatives, which have the potential to change the game at short notice, creating outsized opportunities for well-positioned investors. 

We search for ‘green alpha’ where new technologies are poised for rapid growth, and explore increasing exposure to emerging markets, where significant capex will come ahead. 

And we look further still. Beyond traditional metrics and initiatives. Shifting focus to climate and nature-positive solutions, as policymakers and consumers embrace the possibility that we can begin to unravel the environmental damage done. 

Our vision is not just of reaching an uneasy truce with nature, but of building a future where nature and our economy work hand in hand.

 

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our advisory board

Taraneh<br> Azad
Taraneh
Azad
Jean-Pascal <br>Porcherot
Jean-Pascal
Porcherot
Hubert <br> Keller
Hubert
Keller
Jeremy<br> Oppenheim
Jeremy
Oppenheim

DOWNLOAD OUR PRESS RELEASE

Discover more on holistiQ –  a dedicated sustainable investment platform to deploy capital for a net-zero and nature-positive economy.

LOIM and Systemiq launch holistiQ (Press Release)_FINAL.pdf

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