UBS צילום אלי דסה
12/09/2019
Shifts toward more sustainable resources, from renewables to plant-based proteins, put traditional commodity producers and investors in them at risk, warns a new report by UBS Global Wealth Management's Chief Investment Office.
Green bonds can help investors and mining, agriculture and fossil fuel producers to tackle environmental challenges.
The world's current use of commodities is unsustainable. Markets must adopt greater urgency in tackling the challenges posed by climate change, major technological advances and shifts in consumer preferences, according to a UBS Global Wealth Management report published today, called "The commodity crunch point".
Globally, food production accounts for 40 percent of land use, 30 percent of greenhouse gas emissions, and 70 percent of freshwater consumption according to the UN. About 2 billion extra people will live on the planet by 2050 – up from just under 8 billion today – and global demand for food is expected to increase by roughly 60 percent.
As for energy, the displaced demand for fossil fuels could exceed current US oil demand of nearly 21 million barrels per day by 2040, equivalent to over USD 1 billion per day at the time of writing.
"Commodity markets are intertwined with the global economy and face numerous challenges. However, we're encouraging our clients to look beyond risk mitigation and seize the opportunity such challenges entail," said Caroline Kuhnert, Head of Ultra High Net Worth for Europe, the Middle East and Africa at UBS Global Wealth Management.
"Many of the changes our research foresees in the commodities sector originate from environmental, social and governance trends," said Michael Bolliger, Chief Investment Officer for Central and Eastern Europe, Middle East and Africa at UBS Global Wealth Management, adding: "We believe investors should make use of sustainable investing, including green bonds, to reap returns as well as support this transition."
