Many of today’s energy investors face a pressing conundrum. Tackling climate change makes investing in clean and renewable energy businesses an attractive long-term growth opportunity; and some investors have also made specific pledges to reduce their clients’ portfolio emissions, over time, to net zero. Over the shorter term, however, most of the energy sector’s profit and return is likely to come from carbon-intensive businesses.
We believe there is a way to resolve that conundrum. A new energy investment paradigm is emerging that aims not only to find the right balance between these two time horizons, but also to use some of the energy industry’s $4tn of annual net income to help unlock the net-zero economy of the future.
How a Hypothetical Energy Transition Accelerator Portfolio Evolves
Reallocation based on ongoing net-zero alignment assessments…
… should eliminate Sleeve III companies and grow the Sleeve IV allocation over time.
Source: Neuberger Berman. For illustrative purposes only, as of September 2023.