In an increasingly populated world, it is estimated that in the next decade demand for water will surge by a staggering 40%. Why should water be viewed as an opportunity to invest and in doing so, provide a positive impact?
Globalisation and prosperous economic development have reshaped our world and created a wealthy middle-class, the people within which choose to enjoy their affluence. Beef production, for example, is one of the most water intensive agricultures requiring 15,400 litres per kilogram compared to just 2,500 litres for rice. Just to put that into perspective the average beef cow weighs approximately 400kg – that’s a total of over 6.1m litres of water!
However, some of the fastest growing populations are also among the poorest. Ethiopia’s controversial construction of Africa’s largest hydroelectric power station and dam has the capacity to create significant water shortages for over 140 million Sudanese and Egyptians downstream risking conflict, famine and, as a consequence, mass migration.
It is clear that if we are to continue to thrive considered investment in our fast depleting natural resources is essential.
At Kingswood, we use the Rebeco Sustainable Water fund, as part of a fully diversified risk-adjusted portfolio, to invest in water as a long-term structural megatrend. The fund invests worldwide, along the water value chain, in companies specialising in irrigation services, water analysis and treatment technologies. With £1bn already under management it is supported by strong demographic and urbanisation trends and its positive impact is measurable against the United Nations 17 Sustainable Development Goals (SDGs).
We firmly believe ESG integration and engagement, effectively implemented, can lead to better investment decisions, and ultimately enhanced returns. Kingswood offers a complementary set of portfolios to its core models which are suitable for socially conscious clients that provide long term stability, sustainability, greater downside protection and yield better long-term risk adjusted returns.
By Harry Merrison, Investment Manager and Vice President at Kingswood