Investment Opportunities In 2021
With 2020 behind us, business owners are optimistic that 2021 will be a better year, if not the best. Though COVID-19 is not yet gone, the optimism is guided by the ongoing distribution of vaccines.
The acceleration of digital trends due to COVID-19 has advanced years' worth of consumer behaviour within months. These trends are expected to expand in 2021. According to Deloitte, "four out of five business owners said they expect to increase their use of digital tools from now onwards.”
Below are five major business trends that will shape investments in 2021.
1. Energy Storage - the key to climate change and net-zero
Energy storage involves the capturing of energy produced at a certain period, then using it later with an aim to reduce disparity between energy production and demand.
Leading climate experts envision a faster acceleration to a clean energy economy than ever before. From policies to surging energy storage installations, actions in the next 12 months are crucial to combating climate change and reaching net-zero.
That said, businesses should expect more actions on long-duration energy storage systems and modular energy storage. These trends will take a large percentage of the 8.2 billion US dollars annual investment in energy storage by 2024.
Hydrogen energy storage (HES) is another form of energy storage in which electrical power is converted into hydrogen. The continued rollout of hydrogen gigafactories and green hydrogen growth is expected to drive the energy market in 2021.
Australia’s National Hydrogen Strategy and our recent successes with solar photovoltaic, wind, and electric vehicle adoption, are all proof that we are ready for the next step.
2. ESG investing makes it into the mainstream
Also known as “sustainable investing,” Environmental, Social and Governance (ESG) investing refers to investments that seek positive returns as well as a positive long-term impact on society, environment, and business performance.
Looking at the numbers, it's clear that ESG investing was a big success story in 2020. Assets in ESG soared higher globally. The number of investment products incorporating ESG criteria also exploded.
For their part, many investors are integrating ESG considerations across their models in response to changing attitudes and regulations. Given these developments, expect to see:
- More pivoting towards ESG in alternative asset classes, including private equity and hedge funds
- Speeding up of regulations
- More discussions in climate-related themes, e.g. water and biodiversity
3. Circular Economy
A circular economy goes beyond the take-make-dispose industrial model to focus on society-wide benefits. It requires that one process’ waste becomes the input for another.
For companies with a sustainable goal, 2021 will see significant climate actions as businesses sustainably recover from the COVID-19 pandemic. Even more appealing is that many companies are considering the need to move beyond net-zero to zero waste. And what a better way to start than with food waste?
By the way, did you know that “if food waste were a country, it would be the third-largest emitter of greenhouse gases, just behind the US and China.”
It also would be a great country to invest in in 2021!
4. The breakup of the social media giants
Social media platforms have had an enormous impact on how businesses find and interact with their audiences.
Today, more than 3.6 billion people (half the world's population) use social media daily, making the technology very useful when crafting business strategies. But there is also another side of social media.
Social Media has enabled the manipulation of digital content for illegal purposes, the promotion and distribution of dangerous fake news and products. These vices escalated in 2020 amid a global pandemic and major political showdowns in various parts of the world.
For this reason, the question of social media regulations is inevitable. Governments around the globe have already taken some form of regulatory action. In Australia, for example, the legislation against Google/Facebook, privacy, and data ownership will reshape the social and digital worlds that we're living in.
It will be an interesting year for anyone who has built their business on accessing social media data to drive engagement and sales.
5. New Normal – Development of Virtual World
The most excellent news for 2021 is perhaps that the coronavirus vaccine rollout in various parts of the world. While this is a basis for excitement, normal life is still some way ahead.
2021 looks like another year of limited global travel, zoom fatigue, etc. On the positive side, expect increased digitisation due to contactless business - this will fundamentally change the business landscape.
The same applies to the realisation of virtual events and experiences as more leaders and individuals realise the benefits of virtual platforms, including; video games, augmented reality (AR), and virtual reality (VR).
According to Ark Invest’s ‘Big ideas 2021’ report, “The revenue from virtual worlds could increase from today’s $180 billion to $400 Billion By 2025.” This is a whopping 17% annual compound and sounds like a great investment area!
The bottom line
Regardless of how your investments performed last year, it’s crucial to be prepared for 2021. No development is in a vacuum. All of the above trends play different roles as they simultaneously shape the socioeconomic landscape. It would be wise for investors and, even more so, for startups to recognise the interrelations between them.
It all boils down to this: It's better to invest in societal thematics rather than technology plays. Look at how technology shapes business and society and find the rising tide.