In the aftermath of the recent COP 26 summit, we believe the sustainability of economic systems – in both the short and in the long term – is likely to remain high on the global policy agenda in 2022. Concerns include the vulnerability of global shipping networks and supply chains, natural gas shortages in Europe and rapid demand growth in China, and the longer-term need for investments to reduce carbon emissions. We believe these policy priorities could spur a boom in both public and private infrastructure investment that sustains economic and earnings growth in 2022.
In our view, this wave could drive a new ‘super cycle’ of demand for certain commodities – such as lithium, nickel and copper – and industrial goods that are vital to the development of renewable energy sources, storage systems and upgraded power grids. While investment ultimately should expand capacity and productivity, the shorter-term impact of sustainability efforts could be inflationary, particularly if this is combined with supply chains moving onshore.
