Rapidly rising average temperatures and frequent extraordinary climate events make it hard to imagine a rethink of the drive towards a low-carbon future. But transitioning away from fossil fuels, as Julian Bishop, co-portfolio manager of Brunner investment trust, points out, is “an unprecedented multi-decade re-engineering of the entire global economy”.

And there are certainly no guarantees of a smooth journey, as politicians face numerous conflicting pressures. For instance, the UK government has pushed back a ban on new cars with combustion engines by five years. Meanwhile, in Germany, the Building Energy Act “has been a bit disappointing in terms of timelines for phaseout of fossil fuel boilers”, says Fotis Chatzimichalakis, co-portfolio manager of Impax Environmental Markets investment trust (IEM). 

Unexpected crises may also divert political attention and throw up competing short-term priorities — a prime example being the energy price hikes precipitated by Russia’s war on Ukraine. In that case, the disproportionate impact of higher energy bills on lower-income households in the UK pushed the issue of energy security back up the agenda, with plans for further investment in domestic oil and gas extraction announced by Prime Minister Rishi Sunak.