Megatrends are powerful, transformative forces that can change the trajectory of the global economy by shifting the priorities of societies, driving innovation and redefining business models. They can have a meaningful impact not just on how we live and how we spend money, but also on government policies and corporate strategies.
The UN PRI (link)
The UN PRI release a "responding to megatrends" report. Most organizations share a common belief that megatrend dynamics will result in multi-dimensional transformation across society, technology, economics, environment and politics (STEEP). Megatrends can all be defined by by intuitive and practical key economic indicators. As such, the impact of these megatrends are identifiable in terms of how they change businesses, the financial system, society and the environment.
The UN PRI identified 5 primary trends sub-trends:
Primary trend | Sub trend | Rank |
Environmental challenges | 1. Chonic. 2. Acute. 3. Transition to low economy | 8 7 |
Social and demographic | 4. Managing human capital. 5. Inequality, populism, conflict. 6. Saving deficits. 7. Public sector finance pressures and policy responses. 8. Changing consumption preferences | 6 5 |
Globalization and connectivity | 9. Trade in goods and services. 10. Capital flows. 11. Information and communication flows. | 10 9 |
Emerging Economy Growth & Dynanism | 12. Urbanization. 13. One Belt, One Road. 14. New EM business competitors. 15. New consumer and middle class. 16. New EM institutions, governance, and strategic alliances | |
Technology advances | 17. Cyber security and privacy. 18. Digitalization and the internet of things. 19. Automation and AI. 20. New Fintech. 21. Biotech and personalized medicine. | 1 3 2 4 |
BlackRock (link)
Thematic investing is an approach provides an opportunity to identify and isolate powerful themes and gain pure exposure to them via companies – across regions and sectors - with underappreciated growth prospects. At the centre of BlackRock's Thematic investing philosophy lies 5 megatrends shaping our future:
BlackRock has a number of associated funds: circular economy, next generation technology, future of transport, sustainable energy, world health science, world mining, nutrition fund, climate action equity.
Generation IM 2023 trends (link)
Generation produce their trends on a sector basis outlined below:
Trend | Comments |
|---|---|
Power | Some countries have made marked progress in weaning themselves off fossil fuels. In Europe, emissions from the electricity sector are expected to fall sharply this year. Worldwide, renewable energy is meeting 80 percent of new power demand, and we may be nearing a global peak in power emissions. A new bottleneck has cropped up, though: years-long delays for renewable projects trying to connect to the grid. |
Transportation | Electric vehicles are now climbing a rapid adoption curve in the world’s largest automotive markets. The looming problem will be producing enough vehicles to meet the demand. Shortages and high prices for critical battery minerals like lithium and cobalt raise big questions about securing additional supplies. Can we produce the new green minerals in a more ethical way than the old dirty minerals? |
Buildings | Sales of heat pumps, the critical technology for cutting emissions in buildings, have jumped by double digits for two years running. They are up as much as 50 percent in some European markets, and heat pumps are now outselling gas furnaces in the United States. But governments have made less headway encouraging other types of retrofits, and we are still a long way from a package of policies that will eliminate emissions in buildings. |
Industry | At long last, we are seeing investment beginning to move into the transformation of industry. Hydrogen announcements are now coming fast and furious; indeed, far more projects have been announced for 2030 than the anticipated market for hydrogen would seem able to support. Even abundant, low-cost hydrogen will be limited in its potential uses. How much of the hydrogen hype actually makes sense, and where does the developing hydrogen economy leave us in decarbonising the rest of industry? |
Land & Food | Big new commitments were made over the past year to saving the natural world. On the international stage, the most important was a global agreement to halt biodiversity loss and stop deforestation by 2030. Even more important, in the long run, might be binding law adopted in the European Union that seeks to put teeth into such efforts, prohibiting the importation of products of deforestation starting in 2025. The good news, however, was matched by a surfeit of bad: events over the past year created turmoil in the market for ‘offsets,’ projects designed to sequester carbon in forests or elsewhere. |
Financing the transition | Investment in the energy transition is rising rapidly. The flow of funds into clean energy is now 70 percent larger than investment in fossil fuels. But much of the increase has been driven by rising enthusiasm for electric cars, and in other sectors, particularly the clean-up of industry, investment is still lagging. We are far from the levels of investment we will need by 2030 to meet the goals of the Paris climate agreement. |
WHEB Asset Management (link)
WHEB focus on 9 core themes outlined below:
Montanaro Better World Fund (link)
The Better world fund aims to address 6 key themes outlined below
Pictet Asset Management (link)
The primary purpose of a thematic equity strategy is to invest in stocks whose returns are influenced by structural forces of change that evolve independently of the economic cycle. In other words, the approach seeks to transform long-term technological, environmental and societal megatrends into investment opportunities.
Baille Gifford Positive Impact Fund (link)
EU drivers of change (link)
The EU produced a report, building on the experience of both the EEA and Eionet, presents a synthesis of global and European megatrends with illustrations of key emerging trends, wild cards and uncertainties. It aims to inform about on‑going, emerging and potential future developments, raise awareness and contribute to the diffusion of anticipatory thinking.
Charles Schwab (link)
Schwab has 40+ themes which a user can manipulate the stocks for each theme, their weight, performance data, and more.
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