Institutional investors globally, whether or not they have net zero commitments, are eager to align with and prepare for the energy transition. Understanding the pace of the transition has far-reaching consequences for investment portfolios.
We have identified 10 forward-looking indicators of the energy transition that relate to capital deployment, policy shifts and technological advancements. Investors can monitor these indicators, such as electric vehicle charging stations and climate technology funding, to help build resilient, climate-aware portfolios and discover investment opportunities.
Key themes
- The transformation of the global energy system is underway, igniting an unprecedented capital movement with profound implications for investment portfolios.
- Over 80% of Nuveen’s 2024 Equilibrium survey respondents indicated they consider or plan to consider the energy transition in their investment decisions.
- The shift to a cleaner global energy system will be a complex, multi-decade endeavor influenced by interrelated and fluctuating geopolitical, macroeconomic and technological factors.
- The energy transition indicators can help investors evaluate how their portfolios and investment managers are positioned for the energy transition, reassess risks and uncover compelling investment opportunities.
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Important information on risk
Investors should be aware that alternative investments including private equity and private debt are speculative, subject to substantial risks including the risks associated with limited liquidity, the potential use of leverage, potential short sales and concentrated investments and may involve complex tax structures and investment strategies. Alternative investments may be illiquid, there may be no liquid secondary market or ready purchasers for such securities, they may not be required to provide periodic pricing or valuation information to investors, there may be delays in distributing tax information to investors, they are not subject to the same regulatory requirements as other types of pooled investment vehicles, and they may be subject to high fees and expenses, which will reduce profits. Real estate investments are subject to various risks associated with ownership of real estate-related assets, including fluctuations in property values, higher expenses or lower income than expected, potential environmental problems and liability, and risks related to leasing of properties. Responsible investing incorporates Environmental Social Governance (ESG) factors that may affect exposure to issuers, sectors, industries, limiting the type and number of investment opportunities available, which could result in excluding investments that perform well. Investments in middle market loans are subject to certain risks such as: credit, limited liquidity, interest rate, currency, prepayment and extension, inflation, and risk of capital loss. Private equity and private debt investments, like alternative investments are not suitable for all investors given they are speculative, subject to substantial risks including the risks associated with limited liquidity, the potential use of leverage, potential short sales, concentrated investments and may involve complex tax structures and investment strategies. Nuveen, LLC provides investment solutions through its investment specialists. This information does not constitute investment research as defined under MiFID.
