Russia and Ukraine together account for a significant portion of the world’s corn, sunflower oil, wheat and fertilizer production. The war has caused significant disruption to global food supply and the UN’s food price index has posted successive record highs.

Meera Pandit
Global Market Strategist
The crux of sustainable investing is assessing how durable companies are in the long run by identifying risks that traditional company analysis may not capture. The war in Ukraine is first and foremost an immense human tragedy, but it also exposes how seemingly unrelated geopolitical risks and climate challenges intersect, and how companies can innovate to reduce the economic impacts to the consumer. Three key areas of innovation that could address these challenges are renewable energy, agriculture and electrified transport.
Europe’s reliance on fossil fuels from Russia has hindered its ability to swiftly impose energy sanctions. The EU has now reached an agreement to ban Russian oil imports, but it imports 23% of its oil and 38% of its natural gas from Russia, making this a real challenge to achieve. It will require an accelerated transition to renewable energy, but also investment in means to store and transport renewable energy and electrify the grid. These technologies exist, but it will take time and resources to scale up.
Additionally, Russia and Ukraine together account for a significant portion of the world’s corn, sunflower oil, wheat and fertilizer production. The war has caused significant disruption to global food supply and the UN’s food price index has posted successive record highs. Climate change compounds these disruptions as it contributes to depressed crop yields and extreme weather that can damage food production. However, companies are developing solutions for more efficient agricultural techniques and technologies, better waste and water management, sustainable fertilizers and improved supply chain practices that should strengthen the global food system over time.
Finally, the war has also caused energy prices to soar. WTI oil is up over 60% YTD and gas prices in the U.S. have topped $4 a gallon for the first time since 2008. This has many consumers reconsidering the merits of electric vehicles (EVs). The shift to EVs is still in its infancy, but automakers are expanding their line-ups to to include EV options. IHS Markit estimates there will be 130 models available by 2026 from 43 brands globally. Investors should also consider opportunities in the broader EV ecosystem, including batteries, EV chargers and electrification of the energy grid.
The war unfolding in Ukraine is a political crisis, yet it also highlights economic vulnerabilities to many industries and underscores the need to adapt in the face of both geopolitical and climate risks.
Exhibit 14: Contribution to global production of commodities
% of global production, latest
Source: Eurostat, FactSet, HSBC, J.P. Morgan Asset Management. Guide to the Markets - U.S. Data are as of May 31, 2022.