Climate Macro: Why Now?
A Material Risk
Climate change is quickly becoming
a key driver of asset class pricing.
Estimates suggest that physical climate change impacts could lead to over a decade of lost economic growth. The size of the Indian economy could be cut by over a third by 2050; Many Middle Eastern economies could see the size of their economies cut in half. If the climate transition accelerates, carbon intensive industries face a significant hit to revenues.
A Multi-Decade Investment Opportunity
At the same time, the scale of the necessary green transition presents a multi-decade investment opportunity – worth around $4-5 trillion per year.
Understanding the climate interactions between economics, technology, policy and markets will become critical for investors in the decades ahead.
What We Offer
Climate Scenario Planning
We assess a range of plausible climate transition paths, estimating the likelihood of each one. We judge their impact on growth, inflation, and asset class, market and sector returns
Investment Themes
Climate change will create winners and losers across sovereign debt, energy, metals, agriculture and equity sectors. These range from the clean technologies that could displace fossil fuels, to the metal commodities that they will require.
We present investment ideas geared to a variety of timeframes, from long-term secular themes to shorter-term, policy-related plays.
ASR Global Climate Database
Quantifying the top-down impact of climate change on
macro and markets is fundamental to what we do.
Clients can subscribe to a suite of charts and proprietary top-down climate indicators, covering 67 sovereigns,
50+ sectors and sub-industries and a range of commodities
and other real assets.
Examples of Recent Research
Our weekly research notes analyse climate change through the lens of an investor, in six groupings: equities, fixed income, commodities, macro, policy and investment strategy
Strategy
Assessing the world’s first carbon border tax
Next month the EU will introduce the Carbon Border Adjustment Mechanism (CBAM), the world’s first carbon border tax. We examine which six industries will be impacted, how the tax will be applied and the critical timelines to watch.
Assessing the world’s first carbon border tax
Fixed Income
Climate Opportunities for Sovereigns
Climate impacts on sovereign debt tend to be framed in the context of risks. In this report we focus on sovereign opportunities – which countries are best placed to take advantage of domestic renewable potential or clean energy metal mining?
Climate Opportunities for Sovereigns
Commodities
The Coming Clean Tech Metals Boom
The clean tech transition requires a complete overhaul of our energy system, from power stations and cars to supporting infrastructure e.g. grids and chargers. This will place huge demand on the metals & minerals needed to build it.
The coming clean tech metals boom
Equities
Tracking Clean Energy Themes Via Equities
We have created Core Stock Baskets for six transition technologies and themes which overcome these issues. These each feature 12 companies that are central to their theme’s performance and cut across traditional sectors.
Tracking Clean Energy Themes Via Equities
Policy
How to Play Clean Tech Protectionism
Which stocks are most at risk in a trade war, and who has most to gain? US firms look best placed given their large domestic market share; European and Chinese stocks look more exposed; EVs appear the most at-risk technology vs solar & wind.
How to Play Clean Tech Protectionism
Our Team
Our team has a combined 30 years of experience working for institutions on both the sell side and buy side in London and New York. We work closely with ASR economists and strategists to leverage the best ideas across all disciplines of research.
Michael Penn
Head of Climate Macro Strategy
Michael Penn is Head of Climate Macro Strategy, advising investors on how to integrate climate change and natural capital into long-term macroeconomic views, strategy and asset allocation. He is based in London. Prior to joining Absolute Strategy Research, Michael was the Chief Economist and Strategist at Cohen & Steers, a Real Asset fund manager located in New York. The firm manages $100bn in assets. He was a member of the Asset Allocation Strategy Group, with a primary focus on integrating macro strategy views into positions on Infrastructure, Real Estate, Commodities and Natural Resource Equities. He spent ten years at the firm. He previously held macro strategy and economics research positions at Merrill Lynch, both in New York and London. Michael holds a Master of Science in Economics with Distinction from University College London, and a Bachelor of Science in Economics from the University of Nottingham.
Michael Hessel
Senior Climate Macro Strategist
Michael has spent a decade at Absolute Strategy Research covering policy, political risk and long-term thematic research for institutional clients. His Climate Macro strategy research areas of focus are on global climate policy, the clean energy transition and the role of technology. Michael studied at the University of Edinburgh.
