GS Sustain: Reliability and Adaptation

This report examines how rising extreme temperatures drive structural demand for HVAC and power grid adaptation infrastructure. Goldman Sachs highlights 42 stocks across the HVAC and power reliability sectors as potential beneficiaries of this ongoing investment trend.

Key Takeaways

• 1.Rising heat waves and extreme temperatures are expected to drive significant structural growth in global HVAC demand, with the 'Reliability Imperative' fueling corporate and government investment in cooling and grid infrastructure.
• 2.Physical risks categorized as 'persistent' (heat, drought, sea level rise) are more likely to attract proactive investment compared to 'transient' events (hurricanes, wildfires).
• 3.The firm highlights 42 global Buy-rated stocks across the HVAC and power/grid infrastructure verticals that are positioned for revenue tailwinds due to increased demand for adaptation and power reliability.

Table of Contents

• Potential implications if HVAC demand intensity increases
• Disparity of Asia Pacific
• Europe's challenge
• Stocks exposed to rising HVAC intensity, potential Adaptation solutions
• Near-term potential for impact from El Niño and US drought
• Adaptation and the Reliability imperative
• Appendix: How US, China, India and Europe could be exposed to physical risk

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