Russell Waite, investment director at Capital International (Jersey) Ltd, says that by directing capital towards businesses that are helping to address some of the world’s most pressing challenges, including climate change, energy security, resource efficiency and social wellbeing, investors can pursue attractive long-term returns while contributing to a
more sustainable and resilient future
AFTER several years in which headlines have been dominated by inflation, geopolitics and artificial intelligence, climate change has firmly returned to the forefront of public consciousness.
In recent months the exceptional heatwaves and drought conditions experienced throughout much of the northern hemisphere have provided a stark reminder that a changing climate is no longer a distant environmental concern. It is already influencing economies, businesses and household finances.
Across Europe, prolonged periods of extreme heat and below-average rainfall have placed enormous pressure on water supplies, agriculture, energy systems and transport networks. According to the European Commission’s Joint Research Centre, around 50% of the EU and UK experienced some degree of drought stress this summer, while major rivers including the Rhine and Danube fell to record low levels.
One of the most immediate consequences is the effect on food production. Persistent heat and water shortages have significantly worsened crop prospects, reducing yields and increasing pressure on food supplies. In France, for example, maize production is expected to be around 35% lower than last year and this same story is expected to apply to other important food crops.
Lower harvest volumes ultimately mean higher prices and for consumers, this is felt through rising food bills. For central banks trying to contain inflation, it provides a reminder that climate change is becoming an increasingly important economic variable.
The impact extends beyond agriculture. Europe’s inland waterways are vital transport routes for industrial goods, fuels and raw materials. This summer, the Rhine’s flow fell to its lowest recorded July level, forcing vessels to carry lighter loads and increasing transportation costs. Similar problems emerged along the Danube, where low water levels disrupted shipping activity and supply chains.
Energy infrastructure has also been tested. Hot weather increases electricity demand through greater use of air conditioning while placing additional pressure on power generation. In parts of Central Europe, unusually warm river water has affected the cooling capacity of some thermal and nuclear power facilities, reducing output when demand was elevated.
Taken together, these developments illustrate an important reality. Climate change is no longer simply an environmental issue. It is increasingly an inflation issue, an energy security issue and an economic resilience issue.
While Jersey did not experience the same extremes as southern Europe, it came close. As an island community that relies heavily on imported food, fuel and consumer goods, higher agricultural costs, rising transportation expenses and energy price volatility elsewhere quickly find their way into the local economy. Climate change therefore has direct implications for island households and businesses alike.
These realities also influence how we think about investing.
At Capital International (Jersey) Limited, our Better World strategies are designed to deliver strong long term performance while supporting meaningful global progress towards a more sustainable future.
Meeting the challenges of climate change, energy security and growing electricity demand will require significant investment across power generation, electricity networks, energy storage and energy efficiency. As investors, we have consistently focused on forward-looking themes such as electrification, grid infrastructure and the broader energy transition, all of which we believe are supported by powerful long-term structural drivers.
Governments, businesses and consumers all want access to reliable and affordable power. Investment in cleaner generation, battery storage, electricity networks and more efficient energy systems can help deliver these objectives while also supporting decarbonisation efforts.
Another powerful driver is the rapid expansion of artificial intelligence and data centres. While much attention has focused on the technology itself, the growth of AI also requires vast amounts of electricity and supporting infrastructure.
Earlier this year, our business was recognised at the Jersey Finance Sustainable Finance Awards for its commitment to sustainable investing and mobilising capital towards positive environmental and social outcomes.
The recognition reflects both our own long-term strategic goal to invest responsibly on behalf of our clients and Jersey’s growing role as an international finance centre in helping direct capital towards addressing global challenges.
Winning these two awards reflects Capital International’s long-standing commitment to sustainability through its Conscious Capital ethos. Central to this philosophy is the belief that investment can be a powerful force for positive change. By directing capital towards businesses that are helping to address some of the world’s most pressing challenges, including climate change, energy security, resource efficiency and social wellbeing, investors can pursue attractive long-term returns while contributing to a more sustainable and resilient future.
This approach underpins our multi-asset Better World strategies which offer global diversification and strong long term performance, while supporting meaningful global progress towards a more sustainable future.
The heatwaves and droughts of recent months have reminded us that climate change is not a challenge for future generations alone. Its effects are already visible in food prices, transportation costs, energy markets and economic resilience today. While these challenges are considerable, they also create opportunities for innovation and investment.
By supporting businesses helping to build a more resilient, efficient and better world, investors can play a meaningful role in shaping our future.
Find out more about our investment strategies by visiting our website: capital-iom.com/asset-management/jersey
The views, thoughts and opinions expressed within this article are those of the author, and not those of Capital International Group Limited (Group) and/or any of its subsidiary companies and as such are neither given nor endorsed by the Group or any company within the Group. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Group to buy or sell any product or security or to make a bank deposit. Any reference to past performance is not necessarily a guide to the future. The value of investments may go down as well as up and may be adversely affected by currency fluctuations. The Group, its subsidiary companies, clients, and officers may have a position in, or engage in transactions in any of the investments mentioned. Opinions constitute views as at the date of issue thereof and are subject to change.
Capital International (Jersey) Limited is a subsidiary of Capital International Group Limited and is regulated by the Jersey Financial Services Commission for the conduct of Investment Business and Fund Services Business. Capital International and Capital International Asset Management are trading names of Capital International (Jersey) Limited.
