DWS Investments plans expansion of climate-related offerings

DWS Investments has an energy efficiency investment product in the pipeline, to add to a wide range of existing products linked to climate and energy issues.

Thomas Rueschen, DWS’s head of European distribution, told clients in Switzerland that, while the investment theme was already well-known to institutional investors, “it would become increasingly important for the retail market, too”.

In the broad area, DWS already has various funds focused on clean technology, new resources, global agribusiness and responsible investing.

Rueschen said opportunities for investment proliferated in emerging markets “where people want a better life, which means they need more energy. At the same time, a lot of companies have identified, if they make products that are more energy efficient or in line with addressing scarcity of resources, they have a competitive advantage because clients are increasingly aware of this.”

Speaking at the same DWS event, Nicholas Stern, author of the seminal UK Stern Review on the economics of climate change in 2006, said companies pursuing carbon-intensive growth strategies were making “stupid assumptions.

“As a company you cannot be sure what will happen to the carbon price, but assuming zero [price moves] is a pretty stupid assumption over 20 to 30 years. Presuming zero regulation of emissions is also a pretty stupid assumption.

“A ‘low carbon’ strategy is getting less risky. The term ‘low carbon growth’ is a contradiction in terms.”

Stern urged European businesses and investors to push for an integrated energy grid system across the Continent. He said investors should support domestic clean energy technologies – not least so Europe does not lose the lead in this sector to a rapidly advancing China.

“There is a realization in Beijing’s latest Five Year Plan that domestic consumption is a driver of growth, and the benefits of clean quality growth. They see the traffic jams in Beijing, and sand blowing in from the Gobi desert in April, and Beijing is asking how vulnerable is China to climate change? It is a huge risk.”

Stern said priorities on China’s agenda include energy efficiency, renewables, new materials, high-end manufacturing, and communication technology – many of which relate directly to low-carbon industry.

Stern said building an integrated energy grid in Europe would indirectly foster renewable sources often needing transportation, and benefit Europe’s competitiveness at a time this is badly needed.

“It gives you more competition across borders and greater energy security, and you need sources of employment, so the project makes enormous sense. It would give Europe the kind of cutting edge it probably has now in the low carbon sphere, but which it could lose to China.”

He said a ‘sixth revolution’ of low-carbon growth – following revolutions in textiles, industries, railroads, mass production and IT – would “bring two or three decades of strong investment, innovation and growth. If you get it right this is very attractive from a point of view of growth, and it will be greener, safer, cleaner and more bio-diverse.”

David Walker

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