APAC is positioned to benefit from some of the most exciting global trends that offer unparalleled investment opportunities, including urbanisation, mega cities, digitisation and the energy transition. Previous features in this series have focused on the region’s diversification benefits, short-term opportunities, and why active strategies work best. Buckle up for the long-term view.

Of all the trends set to impact APAC in the coming years, connectivity offers one of the most compelling opportunities in terms of monetary revenue and the speed at which the sector will develop. It is also immune from geopolitical risk.

Christy Tan

“Even if economies face growing competition and deglobalization, connectivity has its own momentum,” explains Christy Tan, managing director, investment strategist at Franklin Templeton.

5G penetration is forecast to hit 24 per cent by 2025 (up from 3 per cent in 2020) and 6G promises even faster connections in a dramatic boost to GDP that she says will be led by China. Connectivity is also spurring mobile penetration as people use smart phones to pay and socialise, creating an ecosystem of jobs, tax and revenue streams. Digitization also provides opportunities in technology like blockchain, AI, cloud computing and further up the supply chain, satellite connection.

Amber Rabinov, head of thematic research at $300 billion AustralianSuper, the country’s largest superannuation fund, believes that digital transformation is one of the most significant developments since the GFC. The team views trends through a global rather than regional lens, and she points to the changing composition of the top 10 stocks in the world by market capitalisation off the back of staggering earnings growth to illustrate the point.

“In 2024, nine out of the top 10 stocks in the world have a technology bent – chips, products or services like cloud computing,” she says. “Only one top 10 stock in 2004 remains a top 10 stock in 2024 – Microsoft.”

She also believes that AI’s impact on efficiency and productivity could arrive sooner than expected. “Previous adoption cycles show that it takes at least one decade and often two for a new technology to filter through the economy. There is good reason to think the AI transformation will be relatively rapid.”

The Government of Singapore Investment Corporation, GIC, guardian of Singapore’s estimated $770 billion foreign reserves, views investment in technology according to three themes: opportunities in disruption, protecting existing investments facing disruption and leveraging tech for its own investment and organisational processes.

One team assess industry trends and size the technology portfolio and composition. Another handle early-stage investments through venture capital funds, co-investments and directs supported by a strategy shaped around staying invested for the long term, including post-IPO. It enables tech companies to tap GIC for capital at different stages of their growth and connects the investor to the whole life-cycle of the company.

The green transition

Investors are also positioning to benefit from APAC’s energy transition from transport electrification to wind and solar, EV battery production and the development of low carbon tech. At Franklin Templeton, hydro is fast-becoming one of the most compelling investments bridging the transition, urbanization and infrastructure. Tan says the region needs half a trillion dollars in infrastructure investment between now and 2030.

“All investors in urbanization infrastructure must consider how water comes into play,” she says. “Hydro offers some of the most compelling opportunities.”

AustralianSuper, alongside Ontario Teachers’ Pension Plan, has invested in India’s National Infrastructure Investment Fund, NIIF. The investors put $1 billion each into India’s power, roads, airports, digital infrastructure, and logistics in 2019.

“We are a long-term investor so we can be patient. We don’t have to rush for opportunities and have strong cash flows,” says Rabinov.

GIC’s long-term capital makes it well positioned to ride out the short-term opportunity costs in green tech that some investors aren’t ready to bear. Like in 2023 when exits in climate tech declined and investment in the sector fell 30 per cent on the previous year despite the clear, long-term opportunity in the energy transition.

“Patient capital like ours is well positioned to navigate climate tech’s potential J-curve,” said chief executive Lim Chow Kiat in GIC’s annual report.

Shifting demographics

APAC’s shifting demographics also promise risk and opportunity ahead.

“The percentage of the population above age 65 across APAC is expected to rise significantly between now and 2040, and that 18 per cent of women will be in this age group, a rise from 11 per cent.” says Tan who points to statistics that show  China, Japan and South Korea  could have around 64 million less people by 2040.

But in keeping with APAC’s celebrated diverse economies, population decline in China, Japan and South Korea will be offset by large young populations in India, Indonesia and Pakistan. Moreover, the shift in demographics presents new opportunities.

“Older people have a different set of needs around healthcare, e-commerce and leisure. Expect a shift to a more consumption-led model,” predicts Tan.

Amber Rabinov

Still, investors are preparing for more challenging long-term trends too. At AustralianSuper the focus is on trends around deleveraging China and deglobalization and the expectation that trade volumes as a share of global GDP will continue to fall.

“Tariffs, subsidies and industry policies are front and centre in the current political and economic debate,” says Rabinov. “This process of trade fragmentation is occurring across geopolitical blocs, and we expect it is more than likely to continue.”

In APAC the renaissance of industrial policy has recently manifest in Australia under the Future Made in Australia framework. Rabinov expects government support will focus in areas like microchips, critical minerals, energy security and increasingly, defence. Despite the accompanying investment opportunity, she flags the growing role of governments in industrial policy is also spiking risk in the shape of larger fiscal deficits and debt levels. “This is not new, but it has accelerated,” she says.

Getting it right

Successfully investing in long-term trends requires awareness of where revenue streams are coming from and ensuring investments are scalable. Commentators also advise on a solutions-based approach as opposed to picking unproven opportunities.

“Pick investments that provide solutions to a problem like better healthcare facilities or more carbon reduction,” suggests Tan.

GIC also approaches investment through a problem-solving lens where a clear understanding of the business model in tech and spending time with production engineers is a prerequisite to investment.

“After seeing what problems they can or cannot solve in one domain, we can gauge the success of other domains,” states the investor.

Investors face fierce competition for assets in future-focused sectors like data centres and energy. But Tan celebrates the competition as indicative of the opportunity.

“Competition is a good thing – it ensures efficiency,” she says.

Long-term trends can also surprisingly quickly pivot. Regulation can change and technology investment is always accompanied by the risk of disruption down the line.

“Incumbents are constantly challenged by disruptors,” states GIC.

In a final note of advice, investors espouse the importance of boots on the ground. GIC has a local presence in innovation hubs in Beijing and Mumbai and AustralianSuper opened a Beijing office in 2012 for research purposes. Rabinov adds that internal investment is also a crucial pillar to successfully capturing future trends.

“Wherever possible, investments should be managed by those with local insights and proximity to the deals and target assets,” she concludes.

Published in partnership with Franklin Templeton Investments

APAC strategies: Why active management pays

In a region as diverse as Asia investors can lean in and take advantage of inefficiencies and inconsistencies around growth, central bank policy and diverse regulatory regimes; and asset owners in the region are increasingly finding active management, across all asset classes, optimises returns and reduces risk. Top1000funds.com investigates.

Opportunities in APAC: Diverse and dynamic

The list of reasons to invest in APAC is compelling and institutional investors in the region are increasingly tapping the opportunities. Top1000funds.com looks at the different levels of income, volatility, efficiency and ultimately returns across the region.

Canada’s CPP Investments currently manages C$675 billion in assets but is projected to reach $3.6 trillion assets under management by 2050. The operational challenges, particularly the evolution, thinking and implementation of technology supporting the investment process, are a key focus for Jon Webster, the investor’s chief operating officer who explained to delegates at the Fiduciary Investors Symposium at the University of Oxford how the fund sees technology as value enhancing rather than as a cost.

The pension fund for some 21 million Canadians uses technology “to make it a better investor” and deliberately puts technology into the hands of the team to ensure it is put to use and deployed.

Technology is framed as transformational, and within this context used as a substitute for labour and for synergising resources in the organisation. It is also used to expand the opportunity set and augment the ability to invest. Webster said that technology is used with a simple premise in a way that gives the team creative control on a safe and secure platform.

In the last 18 months the pension fund has moved away from rolling out big tech programs and projects, focusing instead on an operating role. This requires analysis of whether people want to use the technology, and if its investments in tech are having an impact. The hope is that this will stop the explosion of technology across the organisation, leading to choices around standardisation and complexity.

“We have to be paid for the complexity we put in,” Webster said.

Because the focus is on deploying technology, there is no pressure to innovate. “We have partners that do that,” he said. He added that the pension fund’s focus reamains on getting the technology into the hands of people who can deploy it and use it in a “super targeted” and “surgical” process.

Technology will only contribute to basis point performance if it goes into the hands of people drawing on those products. He also advised on the importance of tech investment at a base level which will then have a compounding effect over time. He advised on the importance of clear metrics to show the return on tech investment.

Perpetual modernisation is now a fundamental principle at CPP Investments. Integrating AI and machine learning stands at the fore of the latest wave of modernisation and illustrates how tech architecture evolves in a model that is upgraded, evergreen and anchored. Webster also reflected on the importance of knowing “when to buy and when to build” as well as ensuring the team always has the ability to alter course around choices.

He said CPP Investments management team is  clear about where technology provides an advantage, and described the investment team as “deliberate” about where technology adds value – like in research and active equities. (See How technology plays a central role in CPP’s evolving strategy)

Bullish on AI

Webster said CPP Investments is bullish on AI but noted that many investors are reticent and not embracing it.

AI represents a reconfiguration of the tech industrial complex and symbolises a totally new way of thinking. He predicted that all disciplines “that requires a large amount of thinking”  will be impacted by machines.

“40-80 per cent of what you do will be surpassed by machines,” he said.

The pension fund’s operations team already speak the same language as investors. For those that don’t, he said Chat GPT now speaks the language of investment, representing a fundamental change in how knowledge is acquired and distributed within organisations. The technology represents a competitive advantage because many organisations rely on the fact “they think they are above average.”

If “thinking is a material part of what you do” the playing field will level.

Webster urged investors to examine their edge. He said CPP Investments already has straight through processing and technology that reads the documents coming into the private markets operation, putting the information into ledgers, for example.

He acknowledged that it is difficult for teams to buy into the transformative power of technology but concluded that the barriers are now much lower to the incremental use of technology.

For thousands of years economic life was stagnant. Even before the 1950s, few people talked about the idea of economic growth as a measure of economic success.

Speaking at the Fiduciary Investors Symposium at the University of Oxford, Daniel Susskind, senior research associate, Institute for Ethics in AI and associate member in the economics department at the University of Oxford argued that the concept of sizing an economy is fairly recent.

Today it is clear that the pursuit of prosperity has come at a high price, evident in the destruction of the natural environment and sharp inequality. Meanwhile the disruptive impact of new technology like AI remains unclear. Susskind, who is the  author of ‘Growth: A Reckoning’,  said the current growth path of world economies is unsustainable because it is undermining the political system and disrupting communities.

“Growth is related to many of the problems we have today; the price of growth is behind many of our greatest challenges,” he said, linking the problems inherent in growth to a de-growth movement.

“Some argue if growth is the problem, then less growth is the solution.”

But he says that de-growth means freezing GDP at current levels that would abandon people to poverty. Moreover, economic growth has been revolutionary and improved lives, and future growth is possible on a different basis.

“My starting point is we need more growth,” he said.

Still, infinite growth is not possible on a finite planet where growth comes from old-fashioned economic activity based in factories or on farms. The UK is wholly focused on how to increase growth by looking at things in the material world like more houses and faster trains.

He said if we really want to drive growth, the answers won’t come from the material world. He said in the future, growth will come instead from discovering more productive ways of using our finite resources powered with new ideas.

In short, more growth requires more technological progress which in turn requires us to discover more ideas for using our finite resources. It requires rethinking intellectual property and overhauling who owns and controls ideas in society. It means investing more in R&D and getting more people into the economy who are responsible for generating ideas, and using technology to develop ideas.

R&D expenditure as a percentage of GDP is high in Israel, but OECD countries invest much less in research. In contrast, companies like Alphabet and Facebook spend far more on R&D – to the extent that their spend makes even the spend of the most ambitious countries like Israel look meagre.

The use of technology to develop ideas is visible in how Moderna used AI to develop vaccines. In perhaps the most celebrated example of technology evolving to fuel growth, AlphaFold, the AI system developed by  Google DeepMind, can predict a protein’s 3D structure from its amino acid sequence, transforming the way we understand disease in years to come.

Today’s ideas increasingly come from technology, and economic growth depends on countries willingness to invest in these technologies.

However, Susskind said that the growth dilemma can’t be solved by technology alone and we also need to change the nature of growth.

Changing the nature of growth

Growth damages the environment and reducing emissions impacts growth, creating a trade off between growth and climate. “Protecting the climate has a price in terms of economic growth.”

Technological progress in producing renewable energy means economies can continue to grow without producing emissions. He pointed to the exponential decline in the cost of solar modules as an example to illustrate how growth can become greener than before.

He also suggested we could change the nature of growth by changing incentives. During the pandemic, employers adopted and developed new technology so that staff could work remotely in a leap forward that would have normally taken decades. Similarly, the development of the vaccine was accelerated by incentives.

He said we should use every tool at our disposal to change the nature of growth to make growth less destructive, leading to healthier politics and flourishing local communities.

Susskind suggested economies revise their GDP measure. This could include finding a way to measure the things we care about and bundle it into GDP in a GDP-plus model. He suggested presenting these types of questions to citizens in mini-publics or citizen assemblies to find out what we value most. Citizen juries and panels could ask moral questions about values to find out the extent to which we value growth more than other life measures. This kind of new thought process offers an existential opportunity and a chance for moral renewal.

“These are not questions that can be asked by technocrats; they need to be answered by citizens.”

One area mini publics could help resolve conflict is net zero. A large political constituency has not signed up to net zero. Changing the nature of growth and embracing the costs that come with it, involves politics and bringing people together.

He said it is unsettling that such consequential tech sits in the hands of private sector companies. Mini publics could also be used to ascertain our appetite to use technology to fire up growth because it will involve moral questions – our capacity to use technology will run far ahead of what we are willing to do.

“Barriers to tech have less to do with technology’s capabilities and more to do with moral apprehensions.”

Susskind concluded with the metaphor of a train on fixed rails to describe our current view of growth. He said a better metaphor is to see growth as nautical on a boat at sea with an enormous discretion to go in any direction.

Using a factor model comprising real rates, inflation, growth and liquidity the State of Wisconsin Investment Board has “swapped binoculars for sunglasses” to see a new picture that effectively highlights inflation risk.

The sharp uptrend in the correlation between stocks and bonds in 2021 was a wake-up call to investors but few understood the causes or consequences or what had happened.

Most available risk models don’t capture macro-economic risk and investors struggle to see this exposure in their risk reports.

In an effort to understand what had happened, the State of Wisconsin Investment Board, SWIB, developed a factor portfolio to provide a better lens to observe the effects of macro-economic changes in its asset allocation. This revealed that inflation had a significant impact on stock bond correlations, explained Edouard Senechal, senior portfolio manager, SWIB, speaking at FIS Oxford.

Senechal is tasked with overseeing an exposure management program at SWIB, and his job is to craft an asset allocation overlay. Sometimes the team seeks to hedge exposure if there is too much risk, and other times they want to increase those exposures in a process that necessitates measuring and sizing the risk of the program.

He explained to FIS delegates that the team could see the correlation in stocks and bonds in 2021 was picking up, but they were not sure what was triggering it. Concerned about the significant impact on risk, SWIB called on its investment management partners and academics for help. It was the start of a research program with Robeco to assess what had happened and the consequences. In 2024 they published a joint paper  published in the Financial Analysts Journal.

“Back then there were very few good answers about what was going on,” said Senechal.

Together the investors looked at the correlation between stocks and bonds over a long-term horizon, casting back 100 years in US and UK markets. The long-term data showed that stable correlations also went through dramatic regime shifts.

Senechal explained that different variables impact the correlation like real rates, growth and inflation. The researchers took the variables used to price bonds and stocks like equity risk premia, real risk and inflation, real rates and bond risk premium, and saw how volatility drove the correlation, and the extent to which these factor came together.

However, the two variables that best explained the move in correlations from an economic standpoint were inflation and real rates. When inflation is low stocks and bonds don’t tend to correlate and low inflation and low rates trigger a negative correlation between stocks and bonds. He said that lower rates change the characteristics of bonds because they become a hedging asset, acting as a type of insurance policy.

However, when inflation picks up, investors don’t’ see the bond risk premia increase.

Senechal identified the issues that drove inflation higher like the post Covid recovery. He said that today deglobalization trends are also taking shape and could fuel inflation. The level of debt amongst developed market governments is high, and it’s tempting for central banks to use inflation to manage debt levels.

Inflation was a risk in 2021 and 2024 but investors didn’t measure it very well. He said the problem lay with investors looking at risk factors but not seeing the inflation factor in the models.

He suggested using four factors comprising real rates, inflation, growth and liquidity, made of assets that can be directly linked to the underlying portfolio. By using these four factors investors can in effect “swap binoculars for sunglasses” to see a new picture that effectively highlights inflation risk.

NEST and AustralianSuper, the largest defined contribution trust funds in their respective countries, face similar challenges related to growth. The Fiduciary Investors Symposium at the University of Oxford heard how the funds are leaning into their growth challenges from a cultural and investment perspective.

Both NEST and AustralianSuper, the largest defined contribution funds in their respective countries, have seen rapid growth in their short histories. NEST has gone from zero to £47 billion and will reach £100 billion by 2030. AustralianSuper with A$341 billion is projected to grow to A$700 billion by 2030.

NEST Invest chief executive Mark Fawcett and AustralianSuper deputy chief investment officer Damian Moloney reflected on the challenges of their huge inflows which includes about £500 million in new contributions per month for Nest, and for AustralianSuper is about A$21 billion in net cashflows per year.

“The cashflow is the challenge,” Moloney told the Top1000funds.com Fiduciary Investors Symposium at the University of Oxford.

“It means exponential growth for the business, but also means an investment challenge for us. We’ve had we’ve built the team quite significantly on the investment side, but also on the member side and deployment has been largely met as planned.”

AustralianSuper has about 57 per cent of assets internalised and has scaled up the size of the transactions in private markets in particular, and it deploys capital externally as well.

“All the support that we need to run those operations, we’ve built over the last five or six years as well,” Moloney said.

“So it’s been a sort of multi faceted program. We’ve made a few mistakes over the over the years, and had to slow down in certain areas.”

NEST was formed in 2008 and the pace of growth has not always been fast, it took about three years to amass the first few £100s of millions in assets. It added asset classes slowly as it grew and was upfront about its terms of engagement with asset managers.

“We don’t pay performance fees, we just get that out up front. But what we do have is cash flow. [A manager] is going to get allocated £100 million or £200 million, possibly £1 billion every year, depending the asset class. So if you value that cash flow, and you can offer us a very competitive fee, then we can have a partnership,” he said, adding in the 13 years the fund has invested it has only fired one manager and that was due to ESG evolution.

“Generally, our manager picks have been good. They’ve pretty well all outperformed since inception, but we’re very careful [with] who we pick. We want them to be with us for a long time, and for them, that’s a benefit, right? They’re going to keep getting that money coming through the door. If you’ve got the imagination to change your business model to work with us, there’s some real benefits to that.”

At a high level, NEST is evolving its governance structure to try to delegate more down to the executive suite, it’s partly why Fawcett moved from CIO to CEO of Nest Invest to make sure that decision making in the executive was high quality and had sufficient rigour.

“For me, it’s about hiring good people,” he said. “We don’t pay a lot of money, so I say don’t come to work if you don’t love your job. It’s for smart people. You get smart people who are really interested in investment, and you empower them. You just push for decisions down as far as you can. And that way, they have a challenging job. They enjoy what they do, as long as there’s sufficient oversight over that. Then people hang around, because where do you get to invest £6 billion a year coming in, expanding into new markets and learning new stuff? Those opportunities don’t exist in many places. So having that highly motivated workforce.”

Sense of mission

Both NEST and AustralianSuper discussed their sense of mission as a motivation in hiring people.

“Our members are amongst the lowest paid in society. We’ve got a lot of minimum wage workers,” NEST’s Fawcett said.

“We’re providing, or we aim to provide the quality of investment product you only get by paying two and 20. In most DC schemes in the UK you can’t get in private markets, and we’ve got a big ambition there. So, it’s galvanizing that sense of mission that our team has for the benefit of members, the purpose.”

AustralianSuper has more than 2000 employees and in the past few years has staffed offices in London, now with 150 people, and New York, 60 people. And the plan is about 70 per cent of the assets will be invested offshore, up from the current position of 50 per cent. Maintaining a sense of culture is a particular challenge given that rapid acceleration according to Moloney.

“There’s internal programs we run around, culture, compliance, and risk so that’s all driven through as a sort of structured program of induction and enculturation,” Moloney said.

“But secondly, the types of people who join us, and I think Mark sort of made this point as well, have a slightly different motivation. They’re interested in the not-for-profit ethos that we have, they’re also interested in that ultimate goal of providing for people’s retirement.”

According to Fawcett one of the consequences of attracting people because of the purpose is an eclectic group of people, and that results in diversity of thought.

“We don’t hire in our own image, because we can’t find people in our own image, if you like, and therefore we just have a group of people who just tend to think differently,” he says. And while that is mostly a good thing, they can “occasionally rub each other up the wrong way” as a result.

Emphasising the importance of hiring the right people, reflecting on what he could have done differently Fawcett focused on hiring and retention.

“Hiring at the start was quite tricky, as it was in the aftermath of the financial crisis. We got some good people on, but we had to hire fast, and we didn’t always hire well,” he said, adding leadership sometimes requires moving people on quickly if they are not a cultural fit. “We’ve got a great team now, and it’s very stable, very low turnover.”

The second thing Fawcett ruminated on was data and technology.

“You know, we were building up the assets and the investment strategy and thinking hard about that. But we didn’t do enough work on technology,” Fawcett said.

Part of the technology challenge for NEST was signing on members and employers at a rapid pace, at its peak it was signing on 2000 employers a day.

“No one’s ever done that before,” Fawcett told delegates. “On the investment side we were focused on investing the money, so we didn’t give technology or data, I think, enough focus. Now I’m working with a consultant, and we’ve got a new custodian and we’re trying to clean it all up. We are on our third risk system in 12 years, so getting that on boarded and integrated, and making sure the data sits in the right place, and the people using the technology are making good, buy, build decisions.”

Moloney said that AustralianSuper has spent around four years building its investment platform, and how to optimise that and create value out of the platform will be important.

“It’s been a big spend and a lot of work over a lot of years, and that optimisation piece is really important. And secondly, the sort of maintenance and extension of it in a way that doesn’t create complexity. That’s one thing that we’re intensely worried about at AustralianSuper is creating complexity as we build more areas of the business, as we create potentially more products, as we get into the retirement phase, as we build the international investment platform and international team. How do we keep it simple?”

AustralianSuper is working on its 10-year plan through to 2035 which is when it will reach $1 trillion.

“And key components of that are investing at scale, performing at scale, and building a business that can deliver on all of that,” Moloney said. “The second thing we’re doing in that program is to work out what’s the right servicing model for what will be we think, five million members at that point in time, a large percentage of which will be in retirement.”

Moloney’s said the fund was trying to restrict the initiatives and projects and growth plans to two or three or four key things.

The potential of technology is constrained only by the laws of physics, whether classical or, increasingly, quantum. As the power of technology increases it allows us to understand the world in a lot more detail – including why the current path to net-zero isn’t going to work.

The disruption to asset owner portfolios from the rapid advances in technology will likely be greater than any impact on portfolios from factors such as geopolitics, the Top1000funds.com Fiduciary Investors Symposium at the University of Oxford has heard.

Senior fellow at Stanford’s Freeman Spogli Institute for International Studies and the Kleinheinz Senior Fellow at the Hoover Institution, Stephen Kotkin, said there is scarcely an area of human endeavour not being reshaped right now by technology, in one form or another.

“The tech disruption that we’re seeing is much bigger than geopolitical risk in terms of what’s going to happen to your portfolios,” Kotkin said.

But to fully grasp the potential impact of technology, one must understand the laws of physics – classical and, increasingly, quantum.

Wykeham Professor of Physics and Tencent Chair in Theoretical Physics at the University of Oxford, Shivaji Sondhi, said that the limits of technology are set by the laws of physics.

“Things are going on, transformative stuff in biology and computation, broadly,” Sondhi said.

“So you might say, what’s the importance of physics? Well, the first thing is really always to recognise that technology is limited by physics.

“The other thing, metaphorically, is that physics bridges software and hardware. By software, I want you to think very broadly that if you have lots of things that you’ve made, and you now want to combine them to do things. So in a computer, you have bits, and it’s using these bits and operations of them – [in] a quantum computer [it] will be qubits – and putting those things together.”

Sondhi (pictured) said there is potential for the power of quantum computing to overtake the power of classical computing, and “in the quantum realm [it] is the case where you see it’s the limits of physics which are now giving you the limits of technology”.

“You have computers, and a physicist says, ‘Well, you know, at the most microscopic level, nature doesn’t work like that.’ It’s not a classical world, it’s a quantum world, can we not do information processing at the most microscopic level, using the laws of quantum mechanics?

“Clearly, it can be no less powerful than what we can do with classical computers, because classical systems are made out of quantum systems, but maybe it could be more powerful.”

Sondhi said the physics department at the University of Oxford is “exceptionally broad”, studying fundamental physics, “which is physics which only physicists care about”, applied physics, and what it describes as “policy-relevant” physics, which itself is quite wide-ranging, but includes studying issues such as climate change.

“If you read a headline, anything that happened in the weather, you can find a headline that says it was climate change,” Sondhi said.

“Oxford is leading the way in trying to combine weather forecasting models, which cannot do centuries, but they’ve become very, very good at doing a week, a week and a half.”

Sondhi said Oxford physicists are conducting “multi-scale analysis” which allows big-picture forecasting to be combined with much more granular, localised analysis to make very accurate predictions about local weather events.

“You can take inputs from the longer running ones and match them to the more fine-grained ones,” he said.

“You can start to bridge the gap between what’s going to happen at the local level in a given region, which is the question of interest, economically [and] personally, to what the large-scale sort of movement is.”

Sondhi noted that also on the issue of climate change the concept of net-zero originated at Oxford, but since then the measurement and therefore the mechanisms developed to achieve it have drifted from the original concept.

Its analysis shows the current path to net-zero isn’t going to succeed.

“The initial formulation of net-zero was the idea that human activities, not counting the biosphere, not counting trees, not counting oceans, was going to go to net zero,” he said.

The actions of trees and the biosphere would continue, separate from steps taken by humans to address carbon emissions, which meant “you would get a decline back to much lower levels, you would get an actual lowering” of carbon in the atmosphere.

“Now, what’s happened in practice is that people have come to count if you have trees, then you say, ‘Well, I’m absorbing carbon’, and it’s absolutely allowed under the rules,” Sondhi said.

“But what this analysis shows is that that’s not going to work. And so perhaps interesting to you would be the idea that at some stage, the underlying science and the exact prescriptions and what the rules are will probably have to come into alignment.

“You may want to watch out for that when that happens.”