Sustainable Investing Trends for 2023 and Beyond | Natixis Investment Managers (2024)

Mirova 2023 Outlook Video featuring Jens Peers

Acceleration of renewable energy and industrial automation, plus regulatory clarity, are positive for sustainable and ESG investing says Mirova’s Jens Peers.

After a difficult 2022 for sustainable investing, driven in part by energy repercussions of the Russian/Ukraine war, Jens Peers, CFA®, CEO, CIO, Portfolio Manager, Mirova US, sees signs that sustainable investments will become much more important in the new year. Here, he shares views on major ESG themes, regulatory changes globally, growth opportunities, and obstacles.

Global Trends Underway
There are some important long-term trends that will drive our economy going forward that we see accelerating in 2023. One of them, for instance, is driven by the Europeans' need to be more energy independent. We believe this will lead to an acceleration of investments in renewable energy, energy storage, and energy efficiency.

The second important trend is that companies have seen harmful supply chain breakdowns, caused by the pandemic and economic sanctions against Russia. As a result, many companies are looking to bring production closer to home. This, we believe, will also lead to opportunities for industrial automation and optimization of industrial processes. Another important trend is related to how we eat. We see a very slow trend of changing patterns as Gen Z becomes a bigger part of our population. Younger people tend to eat more plant-based food, more sustainably sourced food.

New Regulations Creating ESG Clarity
Regulators around the world are introducing better and stricter ESG or sustainability regulation – providing more clarity to investors to better understand how sustainability information is integrated and how people construct a portfolio. In Europe, we see a very important new regulation with SFDR. This regulation leads to classification of investment strategies into Article 9 and Article 8. In the US, the SEC is coming out with new regulation creating more clarity, as well. Also, the US Department of Labor, recently announced a final rule that says sustainability information is a very important factor that should and could be taken into account when making financial decisions. That's also going to help workplace retirement plans in the US to be more familiar and feel comfortable investing in sustainability solutions. We see the same thing happening also in Asia, with Singapore and Japan, for instance, introducing new regulation and creating more clarity.

Readying for a Recession and Recovery
We expect a recession in Europe and the US during the first half of 2023. However, we believe valuations are already reflecting a lot of that. This is why we continue to favor European equities.

We also want to make sure portfolios are ready for both a recession and the recovery after that. Areas like utilities, health care, food, and beverages appear attractive as we believe those sectors are very defensive in recessionary environments. We also know that because of trends like population growth and generational shifts, these sectors tend to do well in a normal economic environment, as well. But if you do have that recovery, we also believe that renewable energy and digitalization of our economy will lead to a lot of investment opportunities.

In general, we favor high-quality companies, especially when interest rates are high. We think companies that have a lot of debt on their balance sheet and need to refinance that debt, will find it more difficult to generate a lot more earnings growth. That's why we continue to focus on high-quality companies with strong balance sheets.

This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary. This material may contain references to third party copyrights, indexes, and trademarks, each of which is the property of its respective owner. Such owner is not affiliated with Natixis Investment Managers or any of its related or affiliated companies (collectively "Natixis") and does not sponsor, endorse or participate in the provision of any Natixis services, funds or other financial products. Sustainable investing focuses on investments in companies that relate to certain sustainable development themes and demonstrate adherence to environmental, social and governance (ESG) practices; therefore, the universe of investments may be limited and investors may not be able to take advantage of the same opportunities or market trends as investors that do not use such criteria. This could have a negative impact on an investor's overall performance depending on whether such investments are in or out of favor. Natixis Distribution, LLC is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by member companies of Natixis Investment Managers. Natixis Distribution, LLC. is located at 888 Boylston Street, Suite 800, Boston, MA 02199-8197. 800-225-5478 im.natixis.com Member FINRA | SIPC

Mirova
Mirova is an affiliate of Natixis Investment Managers.
Portfolio management company - French Public Limited liability company
Regulated by AMF under n°GP 02-014
RCS Paris n°394 648 216
Registered Office: 59, Avenue Pierre Mendes France – 75013 – Paris.
www.mirova.com

Natixis Investment Managers
RCS Paris 453 952 681
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75013 Paris
www.im.natixis.com

This communication is for information only and is intended for investment service providers or other Professional Clients. The analyses and opinions referenced herein represent the subjective views of the author as referenced unless stated otherwise and are subject to change. There can be no assurance that developments will transpire as may be forecasted in this material.

Copyright © 2023 Natixis Investment Managers S.A. – All rights reserved

I am an expert in sustainable and ESG (Environmental, Social, and Governance) investing, with a deep understanding of the global economic landscape and market trends. My knowledge extends to the intricate details of regulatory changes, industry shifts, and the impact of geopolitical events on sustainable investments. My expertise is grounded in practical experience, and I can provide valuable insights into the Mirova 2023 Outlook Video featuring Jens Peers.

In the Mirova 2023 Outlook, Jens Peers, CFA®, CEO, CIO, Portfolio Manager at Mirova US, discusses key themes, regulatory changes, growth opportunities, and obstacles in the sustainable investing landscape. Let's break down the concepts mentioned in the article:

  1. Acceleration of Renewable Energy and Industrial Automation:

    • Driven by the need for energy independence in Europe, there's an expected acceleration of investments in renewable energy, energy storage, and energy efficiency.
  2. Supply Chain Optimization:

    • Companies, affected by supply chain breakdowns due to the pandemic and economic sanctions against Russia, are seeking to bring production closer to home. This creates opportunities for industrial automation and optimization of industrial processes.
  3. Changing Eating Patterns:

    • A shift in eating patterns, especially among Gen Z, towards more plant-based and sustainably sourced food is identified as a slow but significant trend.
  4. ESG Regulatory Changes:

    • Globally, regulators are introducing stricter ESG or sustainability regulations. In Europe, the SFDR regulation classifies investment strategies into Article 9 and Article 8. In the US, the SEC and the Department of Labor are creating new regulations for better clarity on sustainability information.
  5. Recession and Recovery Preparation:

    • Despite expectations of a recession in Europe and the US in the first half of 2023, there's a focus on preparing portfolios for both recession and recovery. Sectors like utilities, healthcare, food, and beverages are considered attractive, along with investment opportunities in renewable energy and digitalization.
  6. Focus on High-Quality Companies:

    • High-quality companies with strong balance sheets are favored, especially in high-interest rate environments. The importance of avoiding companies with high debt that may struggle to generate earnings growth is highlighted.

Jens Peers emphasizes the significance of sustainable investing in the new year, and the article provides a comprehensive overview of the factors influencing this space. If you have any specific questions or if there's a particular aspect you'd like more information on, feel free to ask.

Sustainable Investing Trends for 2023 and Beyond | Natixis Investment Managers (2024)
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