Building a sustainable recovery in Europe

The pandemic has pushed forward the green agenda in Europe. Where could Europe’s industries excel and investors benefit?

Aug 4, 2020

11 minutes

The fast view

  • Before the COVID outbreak, Europe was among the leaders globally in pushing forward a green agenda.
  • The pandemic has accelerated this through greater public spending, some of which is on environmental initiatives. It has also highlighted the importance of social and governance issues, with greater scrutiny on company practices.
  • As part of building a sustainable recovery, European policymakers have ambitious environmental targets, with important implications for industries across Europe to excel or be left behind.
  • Investment in a greener Europe is likely to provide both a short-term boost to the recovery and a long-term benefit to the region and could reinforce Europe’s leadership in green technology.
  • This development offers opportunities for investors to access companies at the forefront of innovation.

Creating a greener future

To tackle the economic fallout from the COVID-19 pandemic, Europe’s fiscal response has involved significant increases in government spending across the region. As discussed in the first paper in this series, Europe's monetary and fiscal stimulus combined is the largest globally1. Moreover, we believe that greater pan-European policy co-ordination and ergo greater fiscal alignment are positive developments that have emerged from this difficult period. Another is a renewed commitment to the green agenda, both as a way of stimulating sustainable economic activity and addressing longer-term environmental concerns. Europe has taken the environmental challenges of the 21st century seriously for some time and has become a leader in many areas of green technology.

In this second part of the ‘Why invest in the new Europe?’ series, we explore how this creates opportunities for investors to participate in this secular trend by investing in green leaders at a time when environmental, social and governance (ESG) concerns are climbing up agendas.

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1 Source: Ninety One, calculated using data from UBS, Unicredit, Goldman Sachs, 30 June 2020.

Authored by

Ken Hsia

Portfolio Manager

Rajeev Bahl

Assistant Portfolio Manager

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