Professional Investor: The winners and losers in a brave new world

Many savers who are contributing to a personal pension will not be drawing on that pension for another 10 or 20 years. So what sort of world will they be retiring into? What are the challenges we will then?

Climate change is the obvious one. Over the next 20 years, we will experience increasingly extreme weather conditions, with hotter summers, colder winters, storms, floods and droughts. By then, one hopes, most governments will have responded in a concerted way to the climate-change challenge, and there will be big changes in our sources of energy, in the cars we drive and in the way we fuel our homes and industries.

Meanwhile, landfill space will be scarce to non-existent, so waste will have to be recycled or minimised.

Societal issues may include increasing concern over obesity, which in the US has now overtaken smoking and alcohol as the main preventable drain on the health services. The response may be a greater emphasis on healthy diets and exercise, particularly for children.

The ageing population in developed countries will place great demands on healthcare. There may be breakthroughs in the fight against major diseases, but demand for joint replacements and care for the aged will continue to rise steeply.

At the same time, population growth in the developing world, along with a demand for higher standards of living, will increase pressure on the earth's limited resources and fragile ecosystems. The trend towards urbanisation will continue, with sprawling slums creating hotbeds of poverty and frustration, leading to rising terrorist attacks.

As socially responsible investors, our brief is to take the long-term view, examining all these themes. Once we have suppressed the desire to throw ourselves out of the window, we try to focus on investing in those companies that are providing solutions to some of these pressing global issues.

With climate change, for example, we see huge potential for investing in alternative energy sources. Wind and solar firms have already done well, but they remain highly attractive long-term investments. Solon and Solarworld in Germany, Conergy in the US and Clipper Windpower in the UK are favourite long-term plays.

We are also interested in companies involved in biofuels, such as Abengoa in Spain and Novozymes in Denmark. Energy-efficiency solutions are attractive long-term prospects, including insulation companies such as SIG in the UK.

Water shortages mean that water meters will probably be mandatory. Techem in Germany makes water meters, while Hyflux and Biotreat in Singapore are pioneering purification technologies.

We're concerned about companies with high energy requirements and high waste outputs. Major companies not addressing these issues are storing up problems - and huge costs - for themselves in the future. Companies whose design innovations incorporate environmental solutions are of interest to us; Apple and Sony are just two examples. Many major utilities are involved in recycling, but an interesting UK smaller company is Fonebak, which recycles used mobiles.

The challenge in knowing which themes to focus on is to identify those that have an obvious investment impact. For example, there is a clear trend towards greater consumption of organic food in the UK, but the market for organic food production is very fragmented and largely in private hands, so investment is limited to the likes of Wholefoods Markets in the US, which owns the organic food chain Fresh and Wild.

By contrast, changing demographics can be played in a number of ways. A host of companies are involved in healthcare innovations, such as Roche, the Swiss pharmaceutical giant, which make the breast cancer drug Herceptin, or Elekta in Sweden, pioneering new developments in radiotherapy. We are also interested in companies involved in broader healthcare solutions, such as Fresenius in Germany, which runs dialysis centres.

It's wise to avoid companies that are part of the healthcare problem rather than the solution; not just tobacco, but those whose main product is junk food, sweets or fizzy drinks. France has banned canned-drinks machines from all schools, and we see the closure of 25 McDonald's restaurants in the UK as just the start of this trend.

Clare Brook is head of socially responsible investment for Norwich Union. Derek Pain is away

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    SThree: Talent Acquisition Consultant

    £22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

    Day In a Page

    John Palmer: 'Goldfinger' of British crime was murdered, say police

    Murder of the Brink’s-MAT mastermind

    'Goldfinger' of British crime's life ended in a blaze of bullets, say police
    Forget little green men - aliens will look like humans, says Cambridge University evolution expert

    Forget little green men

    Leading evolutionary biologist says aliens will look like humans
    The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

    The Real Stories of Migrant Britain

    An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
    Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

    Dying dream of Doctor Death

    Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
    UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

    39.8 degrees recorded on Tube

    There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
    Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

    Computerised cooking is coming

    From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
    Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

    Jessie Cave's feminist cartoons

    The Harry Potter star tells Alice Jones how a one-night stand changed her life
    Football Beyond Borders: Even the most distruptive pupils score at homework club

    Education: Football Beyond Borders

    Add football to an after-school homework club, and even the naughtiest boys can score
    10 best barbecue books

    Fire up the barbie: 10 best barbecue books

    We've got Bibles to get you grilling and smoking like a true south American pro
    Wimbledon 2015: Nick Bollettieri - Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power

    Nick Bollettieri's Wimbledon Files

    Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power
    Ron Dennis exclusive: ‘This is one of the best McLaren teams ever – we are going to do it’

    ‘This is one of the best McLaren teams ever – we are going to do it’

    Ron Dennis shrugs off a poor start to the season in an exclusive interview, and says the glory days will come back
    Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

    Making of a killer

    What motivated a shy student to kill 38 holidaymakers in Tunisia?
    UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

    Just when you thought your commute couldn't get any worse...

    Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
    Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

    The Real Stories of Migrant Britain

    Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
    Cheaper energy on the way, but it's not all sunshine and rainbows

    Cheaper energy on the way, but it's not all sunshine and rainbows

    Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most