Greenflation, Returns and OpportunityThe Russia-Ukraine war, inflation, recognition of the need for energy reliability and rising interest rates are driving debates around how private sector and public sector commitment to Green Capex will evolve and whether this raises or lowers the attractiveness of investment opportunities towards achieving Net Zero, Infrastructure and Clean Water goals. We continue to see Green Capex as an underappreciated secular growth trend as investments rise towards Decarbonization, Infrastructure and Clean Water goals. Even as the incremental $2.8 trillion in annual investment needed this decade vs. 2016-20 is not fully on track: (a) capex + R&D medium-term growth expectations have risen over the past six months, both on an absolute basis and modestly relative to operating cash flow; and (b) governments appear more committed to increasing or stimulating Green Capex, particularly in Europe. We believe corporate returns and forward corporate returns momentum will be a key driver of stock performance, and in this report we present screens that highlight sectors where we see favorable, resilient and/or improving corporate returns levered to technologies needed in the Green Capex mosaic.Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not registered/...
