Research from fund managers

Climate and biodiversity loss are becoming systemic threats to national security, economic stability and the long-term capital of charities.

• More than 325,000 people had fled wildfires in France and Spain by late July 2026, while 265,457 hectares had burned in Spain by 12 August, over half the EU total for the year.
• A glacial collapse on the Nepal–Tibet border killed more than 390 people, left over 1,400 missing, destroyed at least 19 bridges and damaged nearly 40km of road; Hindu Kush Himalayan glaciers are losing ice 65% faster than at the start of the century.
• The UK imports around 40% of its food, and the Joint Intelligence Committee judges that every critical ecosystem it examined is on a pathway to collapse, with some collapses potentially occurring as soon as 2030.
• Physical shocks can raise inflation and reduce wealth even when reconstruction lifts GDP, while losses spread through infrastructure, insurers, banks, supply chains, public finances and charitable needs.
• Sarasin’s response is to stress-test assumptions, require larger margins of safety, identify resilience-enhancing assets and integrate climate and nature into its Sustainability Impact Matrix, Climate Value at Risk analysis and stewardship.

Takeaway: Investors should treat climate and nature loss as financial, credit and security risks rather than externalities, while recognising that the consequences cannot be forecast precisely; Sarasin applies this approach through its Climate Active Endowments strategy, targeting UK CPI + 4% over rolling 7–10-year periods.

AI investing is shifting from rewarding infrastructure spending to rewarding companies that convert AI deployment into productivity, competitive advantage and higher returns on capital.

• More than halfway through Q2 2026 earnings season, corporate earnings and margins were generally resilient, but share-price reactions depended more on forward guidance and management commentary than on quarterly beats.
• Texas Instruments reported record industrial revenue and raised guidance, yet its shares fell nearly 4% because expectations were already too high; Amazon raised spending plans and its shares rose nearly 10% as AWS growth suggested the investment could pay off.
• Microsoft and Amazon showed that AI was re-accelerating cloud demand, while Amazon argued that weak current free cash flow reflected the construction phase of infrastructure whose utilisation, revenue and returns should improve once operational.
• Market dispersion increased: infrastructure software and cybersecurity benefited directly from AI spending, SaaS companies still had to prove AI would accelerate rather than disrupt growth, and power-infrastructure demand was spreading toward automation and factory optimisation.
• Investors also placed greater weight on valuation, capital allocation and management quality, including production investment in defence and portfolio discipline in energy.

Takeaway: Infrastructure providers remain important, but the broader opportunity is in industrial, healthcare, financial, consumer and professional-services companies that use AI effectively; investors should focus on competitive advantage, returns on capital and capital allocation rather than spending alone.