Liontrust Sustainable Investment Annual Review 2023 - Flipbook - Page 17
Conclusions for the year ahead
Peter Michaelis
Early in 2024, the World Meteorological Organisation (WMO)
confirmed that 2023 was the warmest year on record, with the
surface temperature averaging 1.45C (+/-0.12C) above preindustrial levels.
Meanwhile, new data shows that March 2024 was the hottest on
record and the 10th month in a row of record high temperatures.
“The WMO community is sounding a red alert to the world”, said
the secretary general of the WMO, Celeste Saulo.1 Among many
unwelcome records, the warming of oceans stood out for shattering
the previous record. The warming is the direct result of the increase
in greenhouse gases, with CO2 concentrations 50% higher now
than they were in the pre-industrial era.
There is no doubt we are changing the climate of our only planet.
The consequences are predicted to be severely negative (with the
added possibility of tipping points taking us into a completely new
state of climate2).
It is hard to remain positive in the face of such a seemingly
intractable problem. After all, our societies depend on affordable
sources of energy, and currently 80% of this is derived from fossil
fuels – the very thing that is driving climate change.
Yet while it is an enormous challenge, we do believe that it is
surmountable. We have come a long way in terms of developing
cheap renewables that now offer a realistic alternative source of
energy. It is not delusional to imagine a world where energy is
not generated by burning coal, oil or gas. History tells us that
transitions can happen very rapidly once a cheaper and better
solution is found.
Sustainable investment can play an important part in driving this
rapid adoption which we need to see, by backing companies
helping to accelerate the transition and by engaging with
companies to speed their own decarbonisation.
Yet sustainability is not just about averting and adapting to climate
change. It is also about ensuring health and resilience and efficient
use of limited resources. All our themes back businesses helping to
improve these areas too.
So while the precise outcome of 2024 is hard to predict, we do
believe that the trends to a cleaner, healthier and safer world are
still very much intact. These will underpin the longer-term progress
of the companies we invest in and this gives us confidence that
the strong performance achieved in 2023 can be continued in the
years to come.
Climate change indicators reached record levels in 2023: WMO; https://wmo.int/news/media-centre/climate-change-indicatorsreached-record-levels-2023-wmo
1
Explainer: Nine ‘tipping points’ that could be triggered by climate change - Carbon Brief; https://www.carbonbrief.org/explainer-ninetipping-points-that-could-be-triggered-by-climate-change/
2
Liontrust Sustainable Investment: Annual Review 2023 - 17