As global economies make progress toward achieving their net-zero target, the importance of building sustainable infrastructure is becoming increasingly apparent. In the recent Wood Mackenzie Energy Transition Outlook report, a milestone assessment of the global journey towards a lower carbon future, an annual spend of 2.4 trillion USD in renewables, infrastructure, and energy transition technologies must be spent to achieve net zero.
Furthermore, low carbon power supply and infrastructure need to scale up at twice the pace built in the last decade. Simply put, the capital expenditure required for the transition to occur is massive – but not impossible.
This article will look at the infrastructure investment opportunities arising from the transition to net-zero and ETFs that interested investors can utilize to gain access to these long-tenured developments.
Building a Sustainable Future: The Power of Sustainable Infrastructure
As an asset class, infrastructure is broad, encompassing facilities, services, and installations considered essential to a society's functioning and economic productivity. Sustainable Infrastructure further refines what is included in the asset class, with projects like renewable energy sources like wind, solar, and hydroelectric power, energy-efficient buildings, sustainable water management systems, green transportation networks, and waste management solutions.
At its core, sustainable infrastructure aims to create resilient systems that can withstand the challenges posed by climate change, urbanization, and population growth. These systems reduce greenhouse gas emissions and improve the quality of life by providing cleaner air, safer transportation, and more efficient resource management.
Moreover, sustainable infrastructure projects often incorporate innovative technologies and practices that enhance their efficiency and effectiveness, further amplifying their positive impact.
From High-Emitting to Green Revolution: 5 Trends Shaping Sustainable
A 2021 UN Environment Program report noted that infrastructure is responsible for 79 percent of all greenhouse gas emissions and 88 percent of all adaptation costs. However, the landscape of sustainable infrastructure is rapidly evolving, driven by advancements in technology, policy shifts, and growing public awareness. Several key developments are shaping the future of this sector:
Renewable Energy Expansion:
The deployment of renewable energy sources is accelerating globally. Countries are increasingly investing in solar, wind, and hydroelectric power projects to reduce reliance on fossil fuels and decrease carbon emissions. Innovations in energy storage and grid management are enhancing the reliability and efficiency of renewable energy systems.
Green Building Practices:
The construction industry is embracing sustainable building practices, such as using eco-friendly materials, improving energy efficiency, and incorporating smart technologies. Green buildings reduce energy consumption, lower operational costs, and provide healthier environments for occupants.
Sustainable Transportation:
The shift towards sustainable transportation includes the development of electric vehicles (EVs), expansion of public transit systems, and creation of pedestrian-friendly urban spaces. These initiatives aim to reduce traffic congestion, air pollution, and greenhouse gas emissions.
Water Management Solutions:
Sustainable water management involves optimizing the use of water resources through technologies like desalination, wastewater treatment, and efficient irrigation systems. These solutions address water scarcity issues and ensure the sustainable use of this vital resource.
Waste Management (NYSE:WM) Innovations:
Advances in waste management technologies, such as recycling, composting, and waste-to-energy systems, are helping to reduce the environmental impact of waste. These innovations contribute to a circular economy where waste is minimized, and resources are reused.
How to Invest in Sustainable Infrastructure with ETFs
For Canadian investors looking to capitalize on the growth and potential of sustainable infrastructure can do so through distinct ETFs that provide such a thematic focus. Following are three ETFs that have a dedicated focus on sustainable infrastructure but employ differing investment strategies in achieving their objectives.
BMO (TSX:BMO) Brookfield Global Renewables Infrastructure Fund (Ticker: GRNI)
The BMO Brookfield Global Renewables Infrastructure Fund focuses on renewable energy infrastructure projects globally. This ETF provides investors access to a diversified portfolio of companies involved in producing, transmitting, and distributing renewable energy.
As a globally focused mandate, the fund can invest in renewable energy projects across various regions, reducing geographical risk and enhancing potential returns. The value proposition of the fund is its ability to provide exposure to industry leaders in renewable energy, including companies specializing in wind, solar, and hydroelectric power.
Middlefield Sustainable Infrastructure Dividend ETF (Ticker: MINF)
The Middlefield Sustainable Infrastructure Dividend ETF targets sustainable infrastructure projects that generate stable income through dividends. This ETF is ideal for income-focused investors seeking exposure to sustainable infrastructure.
The fund's dividend orientation provides a measure of risk management and stability, as the companies being held have a history of paying regular dividends. This indicates that the projects they undertake generate income and add to shareholder value.
CI Global Sustainable Infrastructure Fund (Ticker: CGRN/CGRN.U)
The CI Global Sustainable Infrastructure Fund offers broad exposure to sustainable infrastructure projects worldwide. This ETF emphasizes the integration of environmental, social, and governance factors into its investment strategy, which is the basis upon which companies are selected for inclusion in the fund. The investment strategy includes many sustainable infrastructure projects, from renewable energy to water management and green building technologies.
Takeaway
For Canadian investors, investing in sustainable infrastructure is a strategic investment decision and a commitment to supporting the transition to a more sustainable and resilient future. As the world continues to prioritize sustainability, the growth and development of sustainable infrastructure present a promising investment opportunity for future-focused individuals.
This content was originally published by our partners at the Canadian ETF Marketplace.