There are challenges to establishing universal access to clean drinking water and basic sanitation but this is where investment in innovative companies can help meet the increasing demand and reliance on our water resources, says Sarah Norris, head of ESG – Equities, abrdn.
Water is a precious, finite resource and essential to life on earth. However, progress on establishing universal access to basic sanitation and encouraging the protection and responsible use of ocean resources is woefully lagging. Every year, International Water Day is marked to draw attention to these issues and agitate for change.
Efforts to ensure universal access to clean drinking water and basic sanitation are faltering. An estimated 2 billion people across the globe don’t have safe drinking water, and a further 3.6 billion lack safely managed sanitation. We are also degrading the world’s water ecosystems at an alarming rate. Over the past 300 years, over 85% of the planet’s wetlands have been lost. Increasing acidification threatens marine life, while plastic pollution is choking the ocean.
2022 saw multiple extreme weather events across every continent, with severe and devastating storms, droughts and floods. Heavy monsoon rainfall in Pakistan caused flash flooding and landslides, destroying 1.7 million homes, displacing 32 million people, killing 1,700 people and pushing nearly 9 million into poverty.
Meanwhile, the Horn of Africa experienced the longest and most severe drought on record. Across Somalia, Kenya and Ethiopia 21 million people now have food insecurity. This includes over three million people at ‘emergency’ levels or higher, meaning they will go days without eating and have been forced to sell belongings.
With a growing global population, solutions that enable more efficient use and management of water, as well as promote better care of our oceans, are essential to help meet the increasing demand and reliance on our water resources.
Within our sustainable funds, but also more broadly in core funds, we look for companies with strong runways for growth. Given the unmet need, companies whose products and services will improve access to clean water and sanitation, and improve efficiencies in existing infrastructure, are tapping into significant revenue opportunities. There are also opportunities in companies showing water leadership by minimising the use of water, or re-using water as much as possible, which should also lower costs.
So where do we think there are opportunities?
One example of a business improving water usage is Tetra Tech, a leading resource management consultant specialising in water services. They help clients across a range of water-related projects, from water reuse work in Mongolia to addressing water loss in Jordan and groundwater replenishment and reuse in California.
Tetra Tech supports 70,000 projects across 100 countries around water reuse and conservation. These include flood prevention projects, storm water management, wastewater treatment and managing water supplies. Where possible, natural solutions are used, such as the creation of a ‘living breakwater’ to stabilise the marsh shoreline and support biodiversity in Alabama, and green stormwater infrastructure to transform the way stormwater is managed in Raleigh, North Carolina.
Last year they helped treat, save or reuse 328,000 megalitres of water and protect, manage or restore 178 million hectares of land and water. Their projects also avoided 20.6million metric tonnes of CO2e.
Another company is DSM, a Dutch business specialising in health and nutritional products, including food supplements and ingredients containing plant-based fish alternatives. They offer vegan fish flavouring, as well as algae omega-3 alternatives and natural algal oil for fish feed. Just one tonne of their Veramaris natural algal oil saves 60 tonnes of wild fish from having to be caught to produce salmon feed, protecting marine biodiversity in our oceans.
Companies whose main business is not related to water can still improve their water management and consumption. Azure Power is just one example. A leading solar power company in India, Azure Power builds and operates some of the largest solar power projects in the country. However, India is a water-stressed country and solar panels which attract dirt and dust require regular washing to work effectively. The company has introduced robotic solar panel brushes to keep water use to a minimum and it also recycles 50% of the ground water it uses. The company is aiming for net water neutrality this year.
These are just a few examples of businesses taking action. As we see increasing demand and need for solutions, we believe corporates can offer innovative ways to tackle our water needs. In the years ahead, this will be increasingly essential as we work to ensure that life on earth can access clean, safe and plentiful supplies of water and that life in the oceans is protected.
[Main image: nathan-dumlao-kDxqbAvEBwI-unsplash]
