Through his firm Grantham, Mayo and van Otterloo, Mr Grantham argues that there are emerging opportunities for strong returns in sectors that are fighting climate change.
A core reasoning for this: companies that are actively targeting climate change are likely growth-oriented, as they are considering long-term environmental factors.
“We believe that investors who do a good job of identifying the winners in the fight against climate change will be handsomely rewarded,” the paper said.
One way to form an investment strategy based on this philosophy could include investing in clean energy solutions.
“Fortunately, by investing in the clean energy solutions that compete with fossil fuels, one can maintain that exposure to traditional energy prices. When fossil fuel prices rise, clean energy solutions become more competitive, and market forces accelerate the transition to them,” the paper said.
Headwinds from climate change
More broadly, investors should be considering the impact of climate change on their investment portfolios, by taking note of where companies are manufacturing and producing their goods.
In an analysis from AMP earlier this year, Kirsten Le Mesurier, portfolio manager of the multi-asset group, encouraged investors to assess the level of risk climate change possesses to their portfolios, regardless of their personal views on the debate.
“Some investors don’t believe in climate change and believe that any consideration of it in an investment process means sacrificing return,” she wrote.
“It should be considered as part of investment decisions.
“Not considering these impacts would mean ignoring the potential impact on share prices and investment returns.
“Where an investor arrives on the climate change spectrum is very relevant to portfolios,” she said.
To read more about the impact of climate change on your portfolio, click here.