Art, antiques, precious metals, and traditional investments have long shared allied roles in the craft of wealth preservation and the age-old pursuit of prosperity. As the world evolves and as businesses, consumers, and investors become more conscious of their impact on the environment, those roles are changing. Concurrently, entirely new asset classes are emerging.
We asked experts from Investec Wealth & Investment, ArtTactic, and the Royal Mint to explain how they think sustainable investment practices will impact their respective industries and discuss the opportunities this may create in the coming years.
The climate crisis is changing consumer and business behaviour
In recent years, pressure has risen on all sectors to minimise their carbon emissions, and precious metals are no exception. Stuart O’Reilly of the Royal Mint says: “Sustainability is key to who we are. We're a large manufacturer, and we are trying to generate as much of our power as possible on our site in South Wales. We've got a wind turbine, we've got a solar farm, and that's generating a lot of the energy that produces the coins.”
Consumer behaviour has also started to shift, with buyers increasingly prioritising ethical choices. “The more awareness we have about our impact on the climate, the more people will start to reconsider their purchasing behaviour and habits,” explains Anders Petterson, founder of ArtTactic, an art market research and analysis company.
It’s not just the way that we shop that is changing, but also the way we invest. “It’s important that we're operating in a way that isn't making the world worse,” says Investec Wealth & Investment’s Max Richardson. “That's a key focus, I think, for investors in the coming years and it's why we're seeing more sustainable strategies develop over time.”
As consumers seek sustainable solutions, new opportunities arise
Anders believes that the trend towards sustainable choices will “benefit the art market, antique furniture, and design, which are all about recycling and using materials again and again. This will potentially lead to more value and more people being drawn to this segment.”
This is a movement that the Royal Mint is embracing. Stuart announces: “We've just invested in a large facility where we're recycling e-waste - circuit boards from laptops and mobile phones. We recycle the circuit boards, and we'll make that gold and silver into jewellery, which we sell through our jewellery range, 886.”
The green transition will also create new asset classes
Investors who already deal in non-traditional assets, such as art and precious metals, may be keen to learn about the new asset classes that are now emerging. Max predicts: “There is little doubt that the next decade will see an explosion of new asset classes, particularly related to natural capital, meaning those ‘assets’ that create the ecosystem services that our entire economy relies on: clean air, clean water, a stable climate, etc.”
Capital is likely to flow in this direction in the near future. Max adds: “If we think about the capital required to achieve the United Nations Sustainable Development Goals, which include climate goals, $4 trillion needs to be spent every year between now and 2030 to achieve these. That's an opportunity that we can't ignore.”
There’s potential in carbon credits
One of the opportunities Max is monitoring is carbon credits: “We're starting to see, in the UK market, funds start to accrue quite attractive asset value returns by taking agricultural farmland in the north of England and Scotland and planting trees. They’re accruing those credits, which will become a currency that is absolutely required by companies that are large emitters of co2.”
Demand for these is only going to rise. He adds: “If we take Shell, the global energy firm, it produces 1,200 million tonnes of co2 every year throughout its entire value chain. Last year, it was able to buy four million carbon credits. With that one company, you see the huge supply-demand imbalance between what it was able to buy and what it ultimately might need to get to. Those credits will likely rise in value in the years to come as, sadly, the climate crisis becomes more intense.”
However, there are no easy solutions to the carbon crisis
Max is keen to stress that carbon credits, while useful, are not without their drawbacks: “One of the criticisms that’s levelled at these offsets is that they're a licence to pollute. You don't need to change your behaviour; you can just plant a few trees or buy a credit from someone who's planted some trees.”
He believes that, to confront the climate crisis, we need to address it from all angles: “We need emissions reductions, we need changing consumer behaviour, and we also need to sequester more carbon through nature-based solutions.”
Investec Wealth & Investment (UK) is a trading name of Investec Wealth & Investment Limited which is a subsidiary of Rathbones Group Plc. Investec Wealth & Investment Limited is authorised and regulated by the Financial Conduct Authority and is registered in England. Registered No. 2122340. Registered Office: 30 Gresham Street. London. EC2V 7QN.