Energy efficiency: a theme of the future

by Pierre Mouton

Energy efficiency: a theme of the future

“Follow the money” – this principle can work just as well for investments as it does in police investigations.

Healthy and sustained increases in equity prices are always boosted by major investment or spending cycles. As examples, think of the bull market in steel at the start of the twentieth century, mass marketing and consumption in the 1950s-60s, or the notorious dot-com era, which fuelled a remarkable rise on the equity markets before the bubble burst.

Just under ten years ago, notwithstanding the current turbulence, a new sequence of significant rises was set in motion on the major equity markets, this time driven mainly by digitisation  – as evidenced by the growth figures posted in recent years by the cloud businesses of the likes of Microsoft, Amazon or Alphabet. This investment cycle, which has been around for a while now, could continue for several more years, although probably with less spectacular growth rates.

We can also expect massive investments in two other areas. One area is security in general and more specifically the defence industry, where we have seen increased spending on armaments since the start of the war in Ukraine.

The other, much more broad-based area we want to talk about is energy efficiency and transition – a theme that will underpin the biggest investment cycle ever seen. Some ballpark figures give an idea of the scale: we estimate that carbon neutrality targets will require spending of at least USD 150 trillion by 2050, equivalent to more than 1.5x global GDP and close to 7x US GDP.

The chances of the funds being committed are very high for several reasons, such as:

  • The climate emergency, and with it the regulations and new obligations that individuals, companies and governments will have to respect.
  • Competition – as we are already seeing, companies are increasingly pointing up the sustainability and compliance of their goods and services in their marketing pitches, and may be awarded carbon ratings – which are likely to impact the less virtuous firms.
  • Productivity, since traditional energy resources will gradually become more expensive, making the benefits to companies of using “clean” energy increasingly significant, with the potential to boost margins.

The unique characteristic of this cycle around energy efficiency is the number of sectors it encompasses. While many people automatically think of producers of electric vehicles, solar panels and wind turbines, and “clean” utilities, the theme is so much more than that. It involves vast swathes of the equity markets and includes companies that will play an essential and integral role in the achievement of carbon neutrality targets. Paradoxically, mining firms are not considered to have environmental credentials, but the energy transition will considerably increase demand for many metals. Similarly, in terms of materials, the construction sector will have to use low-carbon products and insulation. In industry, there are vast numbers of companies active in transport and logistics, machinery manufacturing, continuous process control and optimising electricity consumption, to name just a few applications. And it’s also in the industrial sphere where most of the companies specialising in energy efficiency are operating, in sectors such as IT, semiconductors, computer-aided development software, etc.

It’s clear that building a high quality portfolio diversified by sector and region, while posting reasonable valuation multiples, is perfectly possible by investing in the energy efficiency and transition theme. Overall, the necessary conditions for long-term performance are already in place, and the considerable investments expected for the foreseeable future make for an even more compelling argument.





Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of the date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instruments referred to in this document. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the Finma cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request.

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Antonio Mira

Antonio Mira joined NS Partners in 2006 as Group Chief Financial Officer. He heads the corporate functions and is involved in coordinating and implementing the decisions of the Executive Committee.
An experienced bank auditor, Antonio started his career in 1995 with Arthur Andersen, where he worked for some 7 years before joining Ernst & Young in 2002 as a Senior Manager.
Antonio is a Swiss chartered accountant and a Business graduate of Lausanne University (HEC).

Sébastien Poiret

Sébastien Poiret joined NS Partners in 2008 and manages funds of hedge funds and private client mandates. He also oversees the development of the Group’s offices in Mauritius.

Prior to joining NS Partners, he served as a Trader, Head of Manager research and Portfolio Manager in the USA and Switzerland for a single hedge fund (1998-2004) and for Optimal (2004-2008), Grupo Santander’s fund-of-hedge funds operations.

Sébastien holds a Bachelor’s degree in Corporate Finance from the ESPEME Business School (EDHEC Group) and an MBA in Finance and Economics from the Institute of Business Administration, both in Nice.

Abir Oreibi

Abir Oreibi joined the Board of the NS Partners Group in 2018, where she brings her truly international perspective and rich experience.
Among many other ventures, Abir set up’s first European office. After living and working in Shanghai, Hong Kong, Bangkok and London, she now lives in Geneva, where she is CEO of Lift Events, an organization that identifies technology trends, their business and social impact through the organization of events and open innovation programs. Issues related to the challenges and opportunities created by new technologies as well as the strategic responses from organizations are at the heart of Lift’s activities.
Abir holds a BA in Political Sciences from the University of Geneva. She is an investor, and member of advisory and innovation boards.

Romain Pidoux, CAIA

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Romain Pidoux joined NS Partners in 2011 and heads the Group’s Risk Management.
He started his financial career in 2005 as Head of Quantitative Analysis for a Swiss Family Office, selecting funds and managing portfolio allocation. In 2008, he switched to the alternative world and joined Peak Partners as hedge funds analyst.
He is a Chartered Alternative Investment Analyst (CAIA) and holds a Master’s degree in international relations from the Graduate Institute of International Studies at Geneva University.

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