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Environmental Investing at Pictet Asset Management

June 2020

Five ways that investing could help create a better planet

By investing in companies finding solutions to the environmental crisis, investors can help build a better world for future generations.

A lightbulb moment for the planet

Pressure is mounting on governments and businesses to reverse decades of environmental degradation and to safeguard the world’s natural resources for future generations. Investors can play their part by providing capital to companies developing solutions to environmental challenges. In doing so, they can contribute to a more sustainable future whilst also potentially generating an attractive return. 

Here, we look at five areas where investors, and the companies they invest in, can help make a positive impact on the environment.

5. Plastic alternatives

Hailed as a miracle material when it was invented, plastic has fast become the planet’s worst nightmare. Since 1950, some 8.3 billion tonnes of plastic were produced worldwide, of which only 6 per cent has been recycled1. One refuse truck-worth of plastic is dumped into the sea every minute, and some fishermen now catch more plastic than fish2.

Some fishermen now catch more plastic than fish

Companies are now producing technologically-advanced alternatives to plastic that could change things. In the fashion industry, brands such as Stella McCartney and Prada are using Econyl3, a material made from industrial waste (including fishing nets) which reduces greenhouse gas emissions by 58 per cent compared to nylon3.

4. Better water use, efficiency and recycling

As our population grows so does the demand for this vital resource, which is already scarce.  

Agriculture accounts for ~75% of all fresh water use[4]

The solution is to use less water, more efficiently and to recycle more. 

The waste water recycling market is growing at 20 per cent a year5, with nanotechnology and membrane filtering among the key innovations.

3. Renewable and more efficient energy

Every year, over 36 gigatonnes of carbon dioxide (CO2) is released into the atmosphere6.

Renewables such as wind, solar and tidal are fast becoming cheaper than fossil fuels.

Cleaner sources of energy production will help.

Carbon capture and storage (CCS) can be as simple as planting trees and generating biomass, or as complex as using new technology to suck COright out of the air and lock it up in stone or concrete, or back into old oil or coal seams. The CCS market is growing 14 per cent a year and is projected to reach USD5.6 billion by 20267.

2. Pollution reduction and removal

Air pollution alone kills almost 9 million people a year and cuts three years from our life expectancy8.

Air pollution alone kills almost 9 million people a year

With smarter urban planning and the development of pollution-reducing technology, dirty air and water could be consigned to history. 

The global air pollution control market is expected to grow dramatically in the next few years, reaching over USD100 billion by 20275.

1. Environmental investment funds

An effective way to protect the planet for future generations is to invest in companies developing solutions to its most pressing environmental problems. The environmental solutions sector is thriving – at USD2.5 trillion in size, it is growing at 6-7 per cent per year5.

Environmental funds invest in some of the world’s most environmentally-responsible companies, and those building products or services to help solve environmental challenges.

And investing to safeguard the planet doesn’t necessarily mean having to sacrifice performance. An increasing body of research research indicates that companies with stronger environmental, social and governance (ESG) values are likely to outperform the broader market over the long-term, and prove more resilient in market downturns9.

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A better planet for future generations

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