“Taking scenario work back to the realm of narratives that can be plausible, differentiated and complex, investors can be more conscious about the assumptions built into their stock choices and portfolio decisions – and more adaptable to the world that unfolds as a result.”
- Caroline Cook is the Head of Climate Change at Baillie Gifford where she works across the firm to integrate their understanding of energy, climate and environmental issues into their investment practice. As these interlinked transitions compound, her aim is to improve outcomes for all their clients.
The global climate challenge poses not one, but two simultaneous transitions for long-term investors to consider. A technology transition in energy sources and uses, and an unparalleled shift in our physical environment. While many investors will feel on familiar ground with the potential disruptions offered by new energy technologies, none of us have been exposed to the extent of physical change predicted by the science. And across both transitions, sits an extra layer of unpredictability in social values and government policy.
Navigating this effectively as a long-term investor requires great scenario awareness. The twin transitions will have whole-economy impacts with consequences well beyond the first order. Complexity and non-linear shifts will be rife. Your pre-conceptions, or world views, may not be those that will win out. Determining themes that endure across different futures, and flags that indicate which pathway is in fact emerging, should be a source of edge.
Caroline will be presenting at Global Investment Institute’s upcoming Net Zero Investment Forum, taking place on Thursday, 13 March 2025 at the Grand Hyatt Melbourne, Victoria. To register your interest in attending, click here or for more information email zlatan@globalii.com.au.
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