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Foreword
“To use a computer analogy, we are running twenty-first-century software on hardware last upgraded 50,000 years ago or more. This may explain quite a lot of what we see in the news.” ― Ronald Wright, A Short History of Progress
Over millennia, humans have evolved to identify and respond to immediate threats. For most of our history, this served us well. Short-term threats were aplenty and neither the ability nor responsibility to plan decades ahead were yet upon us.
We now have a much greater understanding of the challenges facing humanity and the timeframes over which they could occur. Yet, as the above quote alludes to, is our very nature limiting the action being taken in response?
For instance, our understanding of the causes and effects of climate change has moved forward significantly in recent decades, but action to address it collectively falls short of the goals of the Paris Agreement. Is this because timeframes such as 2030, 2050, or 2100 feel so distant?
Possibly, especially as the modern world is not devoid of shorter-term challenges and threats, as demonstrated in 2022 by the tragic events of the war in Ukraine. In addition to the immediate humanitarian costs, the war also demonstrates the links between societies and our environment.
In response to Russia’s aggression, Western nations have sought to reduce imports of oil and gas from Russia. This has led to a reshaping of energy markets, prompting debates around energy security now and over the long term, with environmental and social implications whatever the chosen path.
The providers and allocators of capital, us included, have a key role to play in the fair transition to a more sustainable global economy. But, while necessary, this alone will not be sufficient. Capital allocation needs to be combined with government policies containing credible mixes of carrots and sticks.
In that respect, 2022 may prove to be a seminal year with the signing into law of the Inflation Reduction Act in the United States. The Act directs meaningful government spending towards emissions reduction technologies, as well as environmental justice issues. This bold move is likely to increase the level of policy ambition on this side of the Atlantic.
However, not all policy moves have been positive. In parts of the US, ‘ESG investing’ has come under attack as a breach of fiduciary duty and a form of ‘woke capitalism’. In our view this represents a fundamental misunderstanding of what our responsibilities as investors are. We believe that in the long-term sustainability factors are ultimately financial factors and need to be taken seriously. We take pride in the role we play as stewards of capital in 2023 and beyond.
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The Midterms
A Democratic sweep may increase political gridlock, but history suggests limited market impact, with resilient US growth, strong corporate profitability and consumers remaining more important drivers for investors.
A quiet budget that may still change the landscape
The 2026 Budget brought limited headline change but potentially significant long-term implications, particularly for business owners, property investors and savers, through higher tax rates, new Founders Relief and company reforms.
UK Budget - first impressions
The Budget delivers modest fiscal changes with limited portfolio impact, while reinforcing the UK’s manageable debt outlook, although its collection of smaller measures appears driven more by politics than economics.
Research Matters by Rothschild & Co Redburn
How much AI infrastructure does the world need - and how is it going to be funded? Rothschild & Co Redburn's Global Head of Technology Alex Haissl joins Chief Strategist George Karamanos to explore the scale of the data centre buildout, the financing structures underpinning it and the prospects for sustainable returns. They discuss the balance between training and inference, the importance of enterprise adoption, and what credit markets and open-source competition could signal for the next phase of AI investment.
Concrete decisions - pay now or pay later
The built environment must balance decarbonisation, climate resilience and affordability, with collaboration across housebuilders, policymakers, investors and suppliers essential to creating sustainable, resilient homes that deliver long-term value for communities.