By Kate Elliot
Where the City’s movers and shakers have their say. Today, Kate Elliot, head of sustainable research at Greenbank Investments, takes the pen
Why we all need to care more about water – and not just because of the Olympics
It’s hard to fathom here in the UK when we go into our bathrooms and turn on the taps that we are facing a global water crisis. But it is a simple fact that the world is. And perhaps, because it does not impinge on our everyday lives, we seem unable to divert course.
Instead, it is often the smaller but more direct consequences of our failure to protect water that stick in people’s minds: for example, sewage pollution concerns that saw participants in the recent Oxford-Cambridge boat race warned not to enter the water of the Thames and Paris Olympics athletes upping their probiotics to help protect against pollution in the Seine.
While we will all no doubt be watching to see if President Macron does fulfil his promise of swimming in the Seine ahead of the Olympics to prove that clean-up efforts have worked, it’s important that our attention on the water crisis is not limited to these one-off events. And water is not a standalone issue. It is impacted by, and impacts on, broader sustainability megatrends such as climate change, resource scarcity and habitats and ecosystems.
A study published last month analysed human impacts on freshwater supplies across both the pre- and post-industrial periods. It found that we crossed the planetary boundary (essentially the point at which ecological systems can self-regulate disturbances) for freshwater in the mid-20 century and we are now facing systemic risks linked to water supplies.
For investors, whether institutional or retail, we must be thinking about how the companies that we invest in utilise and have an impact on our water systems. That might mean looking at a company’s water use, not just in their own direct operations but also where they have high dependencies on secure sources of water through their supply chain. Changes in water supplies, either through floods, drought or simply degradation in water quality, can cause significant social, environmental and financial damage and it is important that investors understand these impacts.
Investors can also look for potential opportunities. That could be companies that are taking the lead and improving water efficiency through their value chain. Or those offering products and services that enable better management of water resources – for example storm water management systems or sensors to improve detection of leaks in water pipes.
Incorporating ESG and sustainability factors into investment decisions gives us a more complete view of risks and opportunities. If that wider lens also helps to encourage a move to more sustainable business practices and protection of our world’s resources then who could argue with that?
Testing the waters
It’s seemingly impossible these days to avoid mentioning AI, whatever the actual topic under discussion, so far be it from me to buck that trend! When it comes to water, we are seeing emerging uses of AI technology in analysing large amounts of data from remote sensors, helping to avoid false positives in leak detection and enabling issues to be identified and rectified earlier.
Value beyond the dollar
I was fortunate enough to grow up near the New Forest and spent much of my childhood building dens and climbing trees. I can now share that experience with my own daughter and hopefully encourage her to also value nature at an intrinsic level.
Financial markets have never been great at acknowledging value without a dollar sign at the front. But, with the cost of inaction on biodiversity and nature loss estimated to reach $2.7 trillion by 2030, action needs to be taken sooner rather than later.
A global plastics treaty
An international legally binding treaty is currently being negotiated by the United Nations, with the fourth session of negotiations kicking off this month in Canada. Greenbank has joined over 200 other organisations as part of the Business Coalition for Global Plastics Treaty in support of this legislation. We believe a global plastics treaty could help create a level playing field for companies to act on the issue and catalyse private sector investment in solutions to end plastics pollution.
Quote of the week:
“Plans to protect air and water, wilderness and wildlife are in fact, plans to protect man.”
A recommendation
Fans of podcasts will, I’m sure, already be aware of the powerhouse that is This American Life, but I’d like to recommend one episode in particular: Three Miles. This tells the story of a group of kids from a school in a disadvantaged neighbourhood in New York who take part in an exchange programme with an elite private school. It follows up with some of those kids who are now adults and explains far better than I ever could the social and psychological barriers that they have had to grapple with as they move through life.
For me, it’s essential listening for anyone who wants to understand why we no longer just talk about diversity, but equity and inclusion as well.
