of greenhouse gas emissions
circular.
A circular economy emphasises the re-use, re-manufacture and recycling of products to extend their economic life.
lean.
A lean economy mobilises idle assets through sharing rather than the personal accumulation of material goods. For instance, using on-demand car or holiday accommodation services rather than owning a personal vehicle or second home.
inclusive.
While inequality can act as a hidden drag on growth, greater inclusivity can be a driver of innovation, performance and opportunity.
clean.
At USD 2.9 trillion per year, the potential returns generated by a clean economy exceed the USD 800 billion increase in annual investment our analysis suggests is required to decarbonise our economy by more than 260%.
transforming key systems.
How do we transition to a CLIC® economy? Our conviction is that the transition from WILD to CLIC® requires profound change in major systems that affect 95% of our investment universe. The environmental transition will impact all investors because profit pools are changing and all industry classes will be materially affected. The below three systems represent areas where investment is needed at scale to effect urgent transformation and ensure we respect planetary boundaries.
- energy systems. This involves electrifying 70% of our economy through the greening of energy supply and demand, the emergence of new storage and distribution networks and increased energy efficiency
- materials systems. This refers to reducing the intensity of primary materials used for our economic output. It is aided by the rise of new sustainable materials, and resource efficiency to decouple production from primary material resource dependencies while avoiding waste and pollution
- land and ocean systems. This encompasses the return of 1 billion ha of agricultural land back to nature by fostering new food systems and enabling nature to retrieve its regenerative properties. The nature transition will unfold in themes such as climate-smart forestry, renewable materials ecosystem services, sustainable food production and sustainable consumption
Enabling these three themes is the pricing of externalities, or carbon markets.
- carbon. This refers to external pricing pressures and forces from carbon taxes, the compliance markets and the voluntary markets that will impact the three systems. We expect carbon to play a key role by providing market-based incentives to accelerate the transition to nature-based solutions and drive removals of greenhouse gases
systems drive planetary boundaries.
This systems-change framework guides our investment approach because such systems are integrally linked to planetary boundaries. For instance within nature, food and land use together drive planetary boundary transgressions accounting for:
24%
90%
of deforestation
52%
of soils degraded
25%
of biodiversity loss
70%
of freshwater use
As the world transitions to a CLIC® model that operates within and helps restore planetary boundaries, we foresee major shifts in the vast majority of sub-industries within energy, nature and materials. This framework is endorsed by a coalition of major industries and policymakers and is set to guide the way to a CLIC® economy by finding solutions and unlocking opportunities. Using this systems taxonomy focuses our efforts on addressing the areas most under pressure and fortifies our core conviction that sustainability is driving returns.
related pages.
We envision an economy that is circular, lean, inclusive and clean.
We use stewardship to protect and enhance the long-term value of our assets.
Discover more about how our products are catalogued.
The regulatory backdrop guides us at a product and firm-wide level.
Sustainability is today one of the most important drivers of return.
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