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    Make America Green Again

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    The IMF, and others, have been critical of President Trump’s announcements regarding US import tariffs. Many have warned of the risks of a US-China trade war spilling into the global economy and of tit-for-tat protectionism.

    by Ryan Smith, Kames Capital

    - Partner Message -

    Perhaps if the President had framed his ideas from an environmental perspective (unlikely I know), they may have been better received. But in fact, this is what Californian lawmakers are doing.

    How? The Buy Clean California Act, signed into law in October last year, calls for the state to set a maximum ‘acceptable lifecycle global warming potential for different building materials’, specifically steel, glass, insulation and certain types of pipes. Washington State wants to do something similar but also include concrete.

    The act is a big deal because California is the 6th largest economy in the world. It spends $10 billion a year on infrastructure projects like bridges, highways, government buildings, universities.

    Proponents of the California law were inspired to act following the construction of the San Francisco Bay Bridge. The bridge, which opened in 2013, was constructed from steel from a carbon-intensive Chinese mill, despite the project also receiving bids from ‘cleaner’ mills in Oregon and California.

    A lot of articles have talked about the changing dynamics in global commodity markets driven by environmental concerns. But where and how stuff is made increasingly matters. And policies like those of California and others (e.g. Sweden and Switzerland) requiring manufacturers to prove their products’ environmental footprint requires independent audit of a materials lifecycle, including the types of energy used in its manufacture.

    The West have tended towards outsourcing a lot of our greenhouse gas emissions to developing countries.

    That loophole is slowly being closed.

    The Kames Global Sustainable Equity Fund holds the following relevant companies:

    Kingspan

    Approximately 30% of global greenhouse gas emissions are attributable to buildings. Kingspan is the global leader in high performance building insulation. The company is aiming to be 100% renewably powered by 2020.

    Steel Dynamics

    Essentially there are two ways to make steel: primary steel production using a basic oxygen furnace (BOF), where the raw input is iron ore, or via an electric arc furnace (EAF) using steel scrap. Globally, the steel industry contributes 6-7% of human-originated greenhouse gas emissions. EAF offers significant environmental advantages, not least 67% less CO2 emissions versus BOF. Steel Dynamics’ steel production is 100% EAF and the company operates some of the most modern ‘mini-mills’ in the US.

     

    Important information

    For Professional Clients only and not to be distributed to or relied upon by retail clients. The principal risk of this product is the loss of capital. Please refer to the KIID and/or prospectus or offering documents for details of all relevant risks.

    All data is sourced to Kames Capital unless otherwise stated. The document is accurate at the time of writing but is subject to change without notice.

    This document does not constitute an offer or solicitation to buy any funds mentioned, and no promotion or offer is intended in jurisdictions other than those where the fund(s) is/are authorised for distribution.

    The opinions presented are those of Kames Capital fund managers as at the time of publishing and may change as subsequent conditions vary. They are not intended to be relied upon as a forecast, research or investment advice, and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

    Companies mentioned may not necessarily be held in any of Kames Capital funds. The information and opinions contained in these pieces are derived from proprietary and non-proprietary sources deemed by Kames Capital to be reliable, are not necessarily all inclusive and are not guaranteed as to accuracy. Reliance upon information in this material is at the sole discretion of the reader.

    Kames Capital Investment Company (Ireland) plc (KCICI plc) is an umbrella type open-ended investment company with variable capital, registered in the Republic of Ireland (Company No. 442106) at 25-28 North Wall Quay, International Financial Services Centre, Dublin 1. Board of Directors: M Kirby and B Wright (both Ireland), A Bell (UK). KCICI plc is regulated by the Central Bank of Ireland.

    Kames Capital plc is the investment manager and promoter for KCICI plc. Kames Capital plc is authorised and regulated by the Financial Conduct Authority.

    For investors in Austria, Germany, Luxembourg, Malta, the Netherlands, Spain, Sweden, Portugal and Professional/Qualified investors in Italy and Belgium – Kames Capital investment Company (Ireland) plc (the “Company”) is a UCITS collective investment scheme registered with the relevant regulator in each jurisdiction. The Prospectus, Supplement, Key Investor Information (KIID) and reports for the Company together with relevant information and details of paying and information agents, as required by local regulators, are available free of charge and links to them may be found at www.kamescapital.com

    - Partner Message -

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