Daniel Graña: We do believe that China’s net zero pledge by 2060 is a credible pledge for many reasons. Number one, for national security reasons: There’s a yawning gap between domestic production and domestic consumption of hydrocarbons, and that gap is being filled by parts of the world that are perhaps a little less stable. Consequently, for national security reasons, China would like to move away from hydrocarbons.

Number two, for industrial reasons, China certainly wants to move up the value-added curve, move away from making shoes and clothes into more higher-margin, higher intellectual property kind of products. And so pushing solar, wind, and electric vehicle batteries certainly would fit into that industrial policy framework. As a matter of fact, today, more Chinese workers are employed by the renewable industries I just identified than in the coal mining industry.

And lastly, for economic reasons. Today, given the cheaper manufacturing costs for solar and onshore wind, it is cheaper to produce electricity using these renewables than it is from coal, without all the negative environmental implications of coal-based electricity.

And so for those three reasons, I think it does make sense that China wishes to move on from carbon.

Now, what are the investment implications? Well, certainly there are going to be some favored ecosystems. Anything that touches copper, lithium, cobalt, nickel, solar, wind, electric vehicles, batteries for electric vehicles – a lot of these supply chains reside within emerging markets. Some do not, but nevertheless, that creates opportunities for us in emerging markets.

In terms of disfavored ecosystems or parts of the world that we have to worry about, obviously anything that has to do with hydrocarbon exporting, and of course carbon emitting. So steel or cement would have to eventually face a reckoning in terms of the carbon emissions that they currently make. And so, because China is the largest carbon emitter on the planet, their pledge to decarbonize has enormous implications for how we would invest, where we would invest, but it does create opportunities for investors, and that’s what gets us excited about that pledge.