Over the past two decades, China’s secular rise dominated commodity markets, as its industrialization required a massive amount of raw materials to build up the country. As we consider the future, we see many reasons to be bullish on commodities tactically, but one of the most important secular factors will likely support industrial commodity demand for years to come: the shift in global economies away from fossil fuels and toward greener energy. To enable this transition, the rising share of electric power (EVs) in the world car fleet and the rising share of renewable energy in the generation of electric power, along with their requisite infrastructure, all require significant raw materials. These secular forces will support the demand for metals at the same time that future supply growth is restrained due to producers’ low investment in new capacity in recent years. Too much demand relative to supply will require higher prices until demand growth is constrained and/or new sources of supply are brought online. Given the substantial lag between a producer investing and bringing new capacity online, such commodity imbalances typically unfold over many years until they get resolved.
The COVID-19 global health and economic crisis has highlighted the need for leadership and capital to be urgently targeted towards the vulnerabilities in the global economy. The issues of sustainability have never been more important and it’s a critical time for investors to be collaborating for better corporate behaviours and economic outcomes.
According to the IMF, more than $20 trillion is needed over the next 20 years to be invested in climate change and other sustainable development goals. But countries can not achieve this on their own. Governments need to make it easier for business to finance and invest in sustainable development projects, the private sector needs to mobilise for long-term investment, and new solutions for financing the SDGs must be created.
This conference was an urgent call to action for all investors to influence investee companies to change their focus and put people before profits to create a more sustainable economy, and to wake up to the crucial role they play in ensuring a sustainable recovery.
Through case studies of investors and corporate collaboration, investors heard how their peers have been engaging for change on issues relating to the environment, labour practices and better long-term outcomes. The conference addressed the social and economic consequences of the coronavirus and outlined the role that investors can play in the path to a sustainable economy.