Environmental disruption - friend or foe?

Imminent change in the corporate landscape

Public trust in UK corporations is falling. The Edelman Trust Barometer 2018 found that trust in UK business fell 43% since the previous year. An Invesco study on disruption, found that companies themselves are pessimistic about the future and about half of the companies thought that 25-50% of the FTSE 350 would be displaced in the next 10 years. This imminent change in the corporate landscape is driven from a mixture of changing consumer preferences, regulatory, digital and environmental trends. For investors, focusing on a company's management of disruption drivers and direction of change, as part of ESG analysis, is more important than ever before.

Taking environmental disruption as one aspect of these transitional forces, issues such as climate change and waste and water management, are more relevant than ever for investors. Indeed, the EU estimates that around €520-€575bn are needed in annual energy and infrastructure investments to achieve a net-zero greenhouse gas economy; while natural disasters caused a record €283bn in economic damages in 2017. Despite a growing consensus on the need for better environmental solutions and operations, less than one in five FTSE companies say they are disclosing detailed information on the str...