Photo collage of gas burner, windmills and solar panels

Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation.

There is no turning back. Just as the coronavirus pandemic resulted in significant and enduring changes to the ways in which we live, so will the current war on Europe’s borders bring about a necessary reassessment. All countries will seek to secure access to critical resources, especially energy and food. A Rubicon has been crossed: expect an accelerated transition to alternative energy (with implications too for electric vehicles) as well as a simultaneous emphasis on developing novel sources of food supply. Securing the data that underpins every industry now must also be front of mind. None of this will be easy and change will take time, but crucial progress in all areas is already underway. The Future Trends Fund has always invested in a diverse series of secular themes that we believe will only grow in importance, broadly regardless of the macro backdrop. It has exposure to all the above. 

Two years ago, the world was beset by a global pandemic that almost no one foresaw. It brought about a new set of behaviours, many of which have proved enduring. We crossed a metaphorical Rubicon and became digital by default. There is no turning back. We are now at a similar and, arguably, more significant turning point. The Russian invasion of Ukraine marks the first such attack within Europe since 1945, not to mention the largest humanitarian crisis since then too. Of course, the expression ‘crossing the Rubicon’ relates not just to passing a point of no return but signifies the military crossing of the Rubicon by Julius Caesar in 49BC. The current unfortunate set of circumstances will undoubtedly result in changed behaviours, which we again expect to be both lasting and significant.

In contrast to the coronavirus pandemic, where businesses and consumers had to adapt simply because they had no choice, Russia’s invasion of Ukraine is forcing governments across the world to reconsider their policies. These decisions will have notable implications both from an organisational perspective and also when considering investment strategy. Most pertinently, the direction of travel for future policy will be aimed at reducing reliance on Russia and simultaneously bolstering independence wherever possible. Globalisation has been in reverse for some time, with the current crisis serving only to accelerate this trend. Dependence on countries for critical resources will sought to be minimised wherever possible. Supply chains will be reconfigured too. In the near-term, this will likely only add fuel to the fire of inflation (a topic we discussed in our recent View From The Top macro commentary), but in the longer-term, it will reduce countries’ risk profiles. This is the new world order.

Lowered reliance on oil and (Russian) natural gas and an acceleration of renewable energy sources are the most significant consequences of the new world order, the crossing of the next Rubicon. There will likely be no turning back from such a set of policy choices. The second-order consequence of this will also likely be an acceleration of the transition to electric vehicles. These  structural shifts are non-trivial and will take time (as we discuss in more detail below), but once set in train, will likely be difficult to reverse. Elsewhere, countries will also likely have to think more strategically about their sources of food supply, given the importance of Russia and Ukraine within the food value chain. One other crucial trend that has again been brought to the fore by the current crisis is the importance of securing data, particularly given the heightened risks of cyber compromise. We have argued consistently that data have no value unless secured, stored and analysed effectively.

Alternative Energy

Climate and security priorities have merged. Leaders in Europe (particularly, although the argument has validity globally too) have been forced to recognise the vulnerabilities that come from relying on Russian oil and gas. The country ranks number one, two and three, respectively, among the world’s exporters of natural gas, oil and coal (per Reuters). A faster energy transition to alternative sources is the key to the problem. If World War One heralded the age of oil and a shift away from wood and hydropower, then the current conflict will prompt a similar movement to renewables – and with it, increased geopolitical advantage.

Although the current Ukraine crisis is less than a month old, it is notable that Germany, Europe’s largest nation, has already passed the Renewable Energy Sources Act. Its amendments aim to commit the country to switching 80% of its electricity production to renewables by 2030 and 100% by 2035. This is 15 years ahead of prior commitments. Other countries will head down a similar – accelerated – path to transition. Of course, the case for renewables over conventional energy sources is not new; it is just that this crisis has brought it into stark focus. The world invested $920bn in clean energy deployment and innovation in 2021, a record high, per the Bloomberg New Energy Foundation (BNEF). It is now cheaper to save the world than to ruin it, based on the like-for-like cost of installing a new unit of renewable energy relative to a conventional one.

Today, solar and wind make up less than 10% of the world’s energy mix. By 2050, it could be as high as 50%, per BNEF. Optimists might assert that this forecast – made last year – may now be conservative in the context of heightened geopolitical needs. However, don’t forget that in order to reach net-zero emissions by 2050, funding for clean energy deployment would need to average over $2tr a year, at least through to the end of this decade (again, per BNEF). This is non-trivial. Also, do not forget that the speed at which countries can transition to renewable will be constrained by practical considerations such as labour shortages (of appropriately skilled professionals) and the complexity of permitting procedures. Some countries are now in catch-up mode too, given historic levels of under-investment. Renewables will undoubtedly play a significant part in the future energy mix, but pragmatic realism may also dictate that such energy sources are complemented by nuclear, (US) natural gas and potentially even coal in the very near-term.

Electric Vehicles

Similar arguments apply when making the case for electric vehicles. Cars are one of the biggest consumers of oil by-products and the recent c50% increase in gasoline prices over the last year has added c$1300 to the annual cost of owning and operating a personal vehicle in the US (per the American Automobile Association). If you accept that an electric vehicle’s, or EV’s, fuel costs are 4-5 times lower than those of a conventional vehicle, then the logic for an accelerated transition towards electric vehicles is high. Put simply, owning an EV helps the environment and cuts costs.

Progress in EV adoption has been significant in recent years, albeit from a low base. EV car sales reached 6.6m last year, equivalent to 9% of all new car sales. Europe is in the vanguard, with electric vehicles accounting for around 20% of all purchased last year (data per 13D Research). Falling battery costs (down 90% in the last decade, per BNEF), better driving range and a wider selection of models have all helped. To drive future adoption, governments can play a role, not just through subsidisation but also through the provision of incentives both to drive the switch from combustion-powered vehicles and to encourage the establishment of supporting charging infrastructure.

Even if EV sales double this year, context matters. At present, the c50m EVs on the road compare to a total of some 1.3bn vehicles on this planet (per McKinsey). Put another way, 98% of all vehicles are powered by fossil fuels. In other words, the transition to EVs will take time. It is also further complicated by the fact that growing material costs and shortages will constrain availability in the near-term. Lithium, cobalt, copper, nickel and integrated semiconductor chips (the latter requires neon gas) are all critical EV materials, many of which are to be found in Russia/Ukraine. The former supplies a tenth of the world’s aluminium and copper and a fifth of battery-grade nickel (per Reuters). Russia’s dominance in precious metals such as palladium – crucial in the auto (not to mention the electronics industry) – is even greater. Whatever else, increased self-sufficiency in battery materials will be a growing source for nationalism.

Taken to a logical conclusion, the conundrum of a growing argument for EVs combined with inevitably higher EV costs can be solved most effectively by reiterating the case for transport as a service (TAAS). We have written on this topic previously, but an accelerated TAAS strategy could mean not only a cleaner environment, but also increased mobility, reduced congestion and improved safety. If ever there were a time for governments to design more appropriate transport strategies then it would be now.

Food Security

Combined with fuel (already discussed) and shelter, food security is integral both to individual and societal well-being. Consider that around 800m people faced hunger in 2020, while over 2bn did not have access to adequate food, according to the United Nations. We have seen in the past that food insecurity can have dire consequences. It was one of the factors responsible for the Arab Spring uprisings around a decade ago. Russia’s invasion of Ukraine has only accelerated resource nationalism in all respects – not just of crucial minerals described above, but also in respect of food. Consider that combined, Russia and Ukraine are two of the world’s top-five wheat exporters, accounting for nearly 30% of the world’s traded wheat. Additionally, the two countries account for c20% of the world’s corn trade or, in the starkest context, are responsible for 12% of the planet’s total calories (based on data from the International Trade Centre). Additionally, Russia is the biggest supplier of key ingredients in the making of fertilisers, without which almost all crops would falter or lose nutrients.

Against this background, there has been a rush to identify alternative sources of supply. For context, 75% of the world’s food comes from just 5 animals and 12 plants, per the United Nations. We have made the case for some time that countries need to diversify their food supply and seek alternative protein sources wherever possible, especially since almost all animals reared for slaughter consume the same plants as humans. As with changing course on energy or electric vehicles, a major transition such as this will be neither quick nor simple. In the near-term, it will also likely be highly inflationary (higher demand chasing after a shortage of supply). Over the longer-term, alternative protein providers and food innovators should clearly benefit.


Regardless of whether you are a policymaker or business working on the accelerated transition to new sources of supply, data will be at the heart of what you do. It is the lifeblood for how almost every organisational structure is currently powered. Data may not be an end in itself, but it is a highly valuable means to achieving crucial ends. Just as countries will, unfortunately, go to war over natural resources, so data are prized commodities over which it is worth fighting.

The importance of securing data has, therefore, never been higher. Nation-state and ransomware attacks are on the increase. Cybersecurity has now become a top priority for CEOs. December’s Log4j flaw showed just how vulnerable digital systems are. Nearly every business and government was potentially open to attack given the ubiquity of the piece of open source software in which the bug was found. 75% of professionals interviewed by Forrester last year were of the opinion that the scale and speed of cyberattacks would increase, while the industry remains critically short of cyber professionals. Cybercrime cost the world $6tr in 2020, but could reach over $10tr by 2025, per Cybersecurity Ventures. The Russia-Ukraine conflict has brought to the fore the need to secure data appropriately. The current crisis will clearly bring about change to every industry vertical given complicated and interconnected global value chains. What we have merely sought to highlight above are some of the most obvious areas which will likely be affected. Consider this list far from exhaustive.

Investment Implications

No one wants to be seen as specifically benefiting from a crisis. More importantly, remember that our investment approach is long-term, seeking to identify trends which we believe will grow in importance broadly regardless of macro and geopolitical events, and then using rigorous selection criteria to find the businesses best exposed to these themes. We have been writing about data and cybersecurity since 2011, food innovation since 2014, alternative transport since 2015 and alternative energy since 2018. All our previous work can be found on Heptagon Capital’s website and our most recent thematic outlook piece can be accessed here.

The Future Trends Fund has exposure to all the above themes. Alternative energy businesses comprise over 8% of the portfolio currently. We have exposure to Vestas – the world’s largest manufacturer of wind turbines – and First Solar – a leading US provider of solar panels that deploys a proprietary technological solution. Around 3% of the Fund is allocated to Aptiv, a major systems integrator that works with almost every vehicle manufacturer in the world. Aptiv provides both the effective ‘brain’ and ‘nervous system’ that allow electric vehicles to function. Food innovators have featured in the Fund since its inception and currently account for over 10% of Future Trends exposure. MOWI is the world’s largest producer of sustainable salmon, while Kerry Group provides the critical taste and flavour ‘building blocks’ for many food products. Cybersecurity has been a prominent investment theme in the Future Trends Fund since inception. Our two previous investments in this space (Sophos and Avast) were both subject to positive M&A. We started a position in a new cybersecurity business – whose name we have not yet disclosed publicly – earlier this year and prior to the current war. It comprises a c4% weight in the Fund.

Addendum: Our Original Rubicon Thesis, Two Years On

In May 2020, just as the pandemic was unfolding and we were all grappling with its implications, we published a note titled Crossing the Digital Rubicon. We were inspired by Microsoft CEO, Satya Nadella’s comment (made on 29 April) that two years of digital transformation had occurred in the pandemic’s first two months. It was our opinion that the behaviours adopted then would prove enduring, whether these pertained to remote digital working (think Teams and Zoom), or online anything (shopping, payment, education and so on). Our Fund had always been a believer in this thesis, but it took the pandemic to super-charge such trends.

Listen to what the Chief Executives of some of our holdings are currently saying, and you can see how the thesis continues to play out. All the below quotes come from earnings calls hosted in the past three months:

• Peter Wennink, CEO of ASML, the company that makes the machines that make the semiconductors that sit at the heart of every digital trend says this business is seeing “unprecedented demand across all market segments… we are even more confident [now, relative to a quarter ago] in our long-term growth opportunity.”

• On digital payments, Michael Miebach, Mastercard’s CEO, believes that “the path to a more digital life is a sustainable opportunity.” Clearly, “a world that throws off more data is a good one for Mastercard.” Meanwhile, Dan Schulman, the CEO of PayPal, argues that “the world is continuing to digitise… the use of cash is continuing to dissipate.”

• For an insight into the online retail opportunity, listen to Hamid Moghadam, CEO of Prologis, the largest owner of industrial real estate, or big-box warehouses globally. He highlights that “market dynamics have never been stronger” and that Prologis has “never seen” current levels of pre-leasing for its warehouse space in the 40 years the business has been operational.

We could continue, but the key point to highlight here – and with regard to every other trend in which we invest – is that there remains significant runway ahead. No more than 25% of payment volumes are currently digital, with a similar level too for online retail penetration. Take alternative energy deployments or the presence of electric vehicles and you will see penetration levels are even lower, implying a larger opportunity. Regardless of whether pandemic or war provides the catalyst for accelerated adoption, we remain of the opinion that the future trends in which we invest will only continue to grow in importance.

Alex Gunz, Fund Manager, Heptagon Capital


The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital LLP believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital LLP, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital LLP is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital LLP disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

The document is protected by copyright. The use of any trademarks and logos displayed in the document without Heptagon Capital LLP’s prior written consent is strictly prohibited. Information in the document must not be published or redistributed without Heptagon Capital LLP’s prior written consent. 

Heptagon Capital LLP, 63 Brook Street, Mayfair, London W1K 4HS
tel +44 20 7070 1800
email [email protected] 

Partnership No: OC307355 Registered in England and Wales Authorised & Regulated by the Financial Conduct Authority 

Heptagon Capital Limited is licenced to conduct investment services by the Malta Financial Services Authority.

Related Insights

Future Housing: Home! Sustainable Home!
  • Heptagon Theme Pieces

Future Housing: Home! Sustainable Home!

Key Themes for 2024 and Beyond
  • Heptagon Theme Pieces

Key Themes for 2024 and Beyond

Winds of change: offshore edition
  • Heptagon Theme Pieces

Winds of change: offshore edition


Sign up to our monthly email newsletter for the latest fund updates, webcasts and insights.