A Winning Sector

The environmental technology sector has significant growth potential. It already has a record of outperformance against the S&P 500 and MSCI World indices over 1, 2, 3, 4 and 5 years (source: Allianz Global Investors, as at 31 December 2007. GBP, annualised periods)

And according to Ernst & Young, the sector is likely to become a $750bn market by 2016 (Source: Ernst & Young; renewable energy attractiveness indices. Past performance is not a reliable indicator of future returns.)

This phenomenal growth is driven by a hunger for change from governments…

 
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EU-wide goal to reduce CO2 emissions by 20% before 2020
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Kyoto protocol signed by 169 countries – strict targets for 2012
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UK climate bill: legal requirement for 60% emission reduction by 2050
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The Chinese government is likely to invest $200 billion in water infrastructure by 2028
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The Chinese government has committed $180 billion to meet their own clean energy targets
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Since 2001 the US government has invested $18 billion to develop cleaner sources of energy

…from companies…

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BT will invest £250 million in the development of wind farms to reduce carbon emissions
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Marks & Spencer plans to invest £200 million over the next 5 years to become carbon neutral
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Coca Cola has invested over £60 million to build the world’s largest plastic bottle recycling plant
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Wal-Mart targets include spending £500 million a year to increase fuel efficiency in its truck fleet
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Arup plans to build world’s first environmentally-neutral eco-city in Dongtan, China
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India’s Yes Bank has earned “leadership” award from USAID for outstanding contribution to environment

…and from people…

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US hybrid car sales up 300% between 2004 and 2006
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8% of UK adults have switched to a green energy tariff
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47% of Americans purchased eco-friendly products in 2006
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88% of people in the UK recycle paper, followed by glass at 80%
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In the UK 35% of households have five or more energy-saving lightbulbs
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During 2006 there were 51,000 pollution protests in China – almost 1,000 per week

This phenomenal potential for growth presents favourable valuations in many areas. We believe that Allianz Global Investors is well-positioned to identify the winners in the eco revolution.
 
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