disruption-le-opportunita-nel-cambiamento
Key takeaways
- Disruptive change is creating opportunities for corporates and investors.
- Three areas of focus – around technology, resources, and fragmentation – show the causes and effects of ongoing disruptive change.
- Navigating this changing landscape will require agility and new ways of thinking about seeking growth – for both corporates and investors.
Resources: a new scarcity?
With good reason, energy scarcity is a theme that has featured prominently over the last several years. However, the vulnerabilities exposed by the Russian invasion of Ukraine and its fallout are only the tip of the iceberg in terms of the disruption that is underway in both energy and broader commodities markets. Of course, supply issues in gas and electricity markets resulting from recent geopolitical events have only served to underline and accelerate the shift to renewables that has, in the face of climate challenges, been picking up steam for some time. We are currently seeing an explosion in capital investment in the renewables sector, something that is driving demand for various commodities – including rare earths – and will surely further increase the potential for geopolitical tension over access to resources. Indeed, the disruptive effects of the green transition will be felt across economics and politics, and its full implications will likely become clear only in the coming years.
With respect to resources, one further area currently undergoing disruptive change is water treatment and supply. Climate change and rising temperatures shone a spotlight on ageing water infrastructure that is currently not fit for its 21st century purpose. While huge public and private investment is required in this infrastructure, we are now seeing a range of new technologies and approaches to reduce waste and make water storage, treatment, and delivery more efficient. And as climate change threatens to make previously thriving areas uninhabitable, the imperative to develop more innovative water solutions will grow.
The imperative to develop more innovative water solutions will grow as climate change threatens to make previously thriving areas uninhabitable.
Fragmentation: shifting opportunities
We view fragmentation as both a cause and an effect of disruption. Fragmentation, as a geopolitical story, will continue as we see new alignments of states in response to the rise of new global powers, as well as the growing prosperity of many other erstwhile “emerging markets”. Indeed, China has been actively reaching out to much of the Global South through a range of projects, not least its well-known Belt and Road Initiative. Further fragmentation has come from the war in Ukraine, and the fear that geopolitical tension elsewhere in the world may escalate, leading many corporates to take measures to ensure the robustness of supply chains, as well as action from national governments around strategic industries and resources.
The collective effects of this fragmentation along geopolitical lines are likely to be mirrored in economic terms as the major powers vie for advantage and supremacy in critical areas such as semiconductors and data. As China’s tech offering begins to rival the US’s, we may see rival “tech hemispheres” emerge as the largest geopolitical players encourage smaller nations to adopt their systems and standards. Despite this fragmentation, global challenges such as climate change require collaborative solutions, and rival or disparate tech systems will need interoperability, so corporates and governments will need to find new ways of collaborating, even as they express greater autonomy and self-determination. This wave of fragmentation may require new ways of investing that, for example, capture opportunity by theme (such as AI or energy security) rather than being hemmed in by traditional benchmarks.