Unless investment is ramped up – significantly – the world cannot meet desired net zero targets by 2050, according to a paper jointly written by BNY Mellon Investment Management and Fathom Consulting. And this is more about redeploying capital than new investment.
The research undertaken by BNY Mellon Investment Management’s chief economist Shamik Dhar and Brian Davidson, head of climate economics at Fathom, looks at existing global spending commitments, highlighting key areas of necessary advancement. There are significant hurdles the world needs to overcome on the road to net zero. With any transition, especially one of this size and scale, comes not just risk but opportunity. Analysis of investment needs by sector and by country shows that the net zero transition should offer opportunities to informed investors. Here we outline some of the paper’s key points.
Implications for investors
Excerpts from the report: An investor’s guide to net zero.
1.The nature of around US$100 trillion worth of investment will be very different in the net zero scenario compared to business as usual – this creates opportunities and risks.
2.The firms which profit most from the transition will not necessarily be the ones making most of the green investment.
3.Mining activity is set to increase significantly as demand for metals and minerals used for transition-related technology (i.e., lithium) soars.
Incumbents from all sectors, but especially energy and utilities, should play a key role in making net zero a reality; but if they don’t do the green investment, new players will.
BNY Mellon Global Economics and Investment Analysis team
View our team biographies to learn more.
Shamik Dhar has 33 years’ experience as an economist. Starting in H.M. Treasury as an economic assistant in the mid-1980s, he moved to Oxford Economic Forecasting and then spent most of the 1990s as a senior economist in the Bank of England, where he worked on the UK economic forecast in the early days of inflation targeting and on monetary policy analysis in the early days of the Monetary Policy Committee. Shamik moved to Aviva Investors (formerly Morley Fund Management) in 2000 and spent the next 14 years in the City of London, ending up as a Head of Investment Strategy. In 2014, he became Chief Economist at the Foreign and Commonwealth Office in a period of rapid geopolitical and economic change, advising ministers and senior officials on the economics of Brexit. Shamik joined BNY Mellon as Global Chief Economist in October 2018.Shamik has a degree in Philosophy, Politics and Economics from Oxford University and a Masters in Economics from Queen Mary College, University of London. He also spent a year as a visiting scholar at the University of Pennsylvania in the mid-1990’s.
Lale Akoner is a senior market strategist and economist at BNY Mellon Investment Management. She is known for applying global perspective to analyses and providing easy-to-grasp, research-backed investment outlooks to multiple audiences across the bank and clients. She also delivers Investment Management's economics and market views to external audiences through Bloomberg TV, Yahoo Finance, New York Times, Financial Times, CNBC, Reuters, MarketWatch, Le Figaro, The Times, Capital, Business Insider, and Barron's.
A native of Turkey, Lale received her B.A. degree in economics as the highest ranking student from the nation’s one of the leading academic institutions, Bilkent University. She is also a graduate of Yale University where she earned an M.A. degree in economics with concentration in macroeconomics, and from Carnegie Mellon University’s Tepper School of Business where she earned an M.Sc. degree in finance with concentration in financial engineering.
Jake Jolly is a Senior Investment Strategist at BNY Mellon Investment Management. In this role, he is a primary contact for the firm’s largest and most complex clients, providing ongoing updates on the market outlook, investment philosophy, process, and performance across asset classes. He produces rigorously researched market commentary and investment content to shape investment strategy decisions. Jake collaborates with portfolio managers and researchers across BNY Mellon Investment Management’s investment firms to provide a vital link between investment, product, and distribution teams.
Prior to joining BNY Mellon Investment Management in 2021, Jake was a Portfolio Manager at systematic quant manager Dimensional Fund Advisors (DFA) for more than four years. At DFA, he managed the firm’s flagship $16B US Small Cap equity fund, among other factor-based strategies. Before DFA, Jake worked as an emerging markets economist at IHS Markit (formerly IHS Global Insight).
Originally from Northern California, Jake received his B.A. degree in Economics and International Studies from the University of California San Diego (UCSD). He is also a graduate of Brandeis University, where he earned an M.A. degree in International Economics and Finance, and from Carnegie Mellon University’s Tepper School of Business, where he earned his MBA. At Carnegie Mellon, Jake was awarded the distinction of being the graduating MBA with the highest academic achievement in Finance. Jake Jolly is CFA® charterholder.
Sonia Meskin is the US Macro Head in the NY office. Previously, she held roles with the International Monetary Fund, Standard Chartered Bank and the Federal Reserve Bank of New York. In these roles, Sonia held chief responsibility for the analysis of macroeconomic and market developments for external clients as well as internal senior management and policy stakeholders. Sonia received her undergraduate degree from the University of Pennsylvania and her Masters degree from the London School of Economics.
Aninda Mitra is a Vice-President and the Head of Asia Macroeconomics and Investment Strategy at BNY Mellon Investment Management Singapore Pte Ltd. He is based in Singapore and reports directly to the Global Chief Economist for BNY Mellon Investment Management. He is the primary contact for the firm’s clients, prospects and consultants in the APAC region for providing ongoing updates and insights about the economic, market and investment outlook on China and other major Asian economies, as well as implications for asset classes.
Mr. Mitra has twenty five years of experience in the financial services industry. Prior to joining BNY Mellon IM’s Global Economics and Investment Analysis team, he was a Senior Sovereign Analyst at Mellon Investment Corporation (formerly Standish Mellon) for more than seven years where he was responsible for fixed-income macro research for Asian and Mid-East markets. Before that he was employed on the sell-side as Head of Southeast Asia Economics at ANZ bank, and, prior to that as a Senior Sovereign Analyst at Moody’s where he managed the ratings of a diverse portfolio of APAC sovereign credits. He began his career, in the U.S., as a Country and Banking Risk Analyst at Wells Fargo. Aninda holds an M.A. Economics from, and was a Bryan Fellow at, the University of North Carolina at Greensboro and a B.S. Economics (Magna Cum Laude) from Bridgewater College.
Sebastian Vismara is a Financial Economist in the Global Investment Strategy team at BNY Mellon Investment Management. His responsibilities include conducting analysis on the global economy, financial markets and investment implications.
Prior to this role, Sebastian spent 5 years at the Bank of England working on global macroeconomic analysis and financial market research. In his last role he provided macro financial research support for Governor Carney's international meeting engagements.
A native of Italy, Sebastian has a two-year Masters in Management with a concentration in Finance from the London School of Economics and an undergraduate degree in International Relations with a concentration in Economics from the University of Florence in Italy.
Download the full report
The conclusions and views expressed in this paper are derived from that research and are the opinion of the authors and do not constitute advice. All charts and data tables are provided for illustrative purposes only and are not indicative of the past or future performance of any BNY Mellon product.
FATHOM AND BNY MELLON INVESTMENT MANAGEMENT PARTNERSHIP
Since 2019, Fathom Consulting has provided bespoke macroeconomic modelling and scenario analysis for BNY Mellon IM’s quarterly economic and investment
outlook publication, Vantage Point.
Quarterly meetings are held to decide the key questions that will inform developments over the forecast horizon so that Fathom can conduct detailed scenario analysis that is theoretically founded, empirically driven and consistent with BNY Mellon IM’s house views. This helps to inform stakeholders of the outlook for the economy and markets, as well as the risks.
Fathom also engages in other bespoke projects for BNY Mellon IM, such as the work and analysis involved in the production of this research. BNY Mellon IM hired Fathom Consulting to provide expertise on the economics of climate change and undertake certain elements of this project. The final output, presented in this report, reflects the efforts of both parties.
The modelling framework and report conclusions were developed in collaboration, while Fathom’s proprietary climate data and tools were used to develop the sectoral risk framework presented in this report.
1This was an American initiative enacted in 1948 to provide foreign aid to Western Europe