World Environment Day is an important day, engaging governments, businesses, and citizens to focus their efforts on pressing environmental issues.
This year’s World Environment Day has biodiversity as its central theme. Trends including climate change, deforestation and intensified agriculture, are extremely destructive to our natural environment. Recent events, from bushfires in Australia and Brazil, to the covid-19 pandemic, have demonstrated the need for governments around the world to deliver covid-19 recovery plans that prioritise the environment.
We have an enormous challenge to protect our increasingly depleted fresh water sources, reduce pollution levels in the atmosphere and limit the global temperature increases in order to help protect our natural habits.
Over the past decade, the investor community has woken up to become increasingly aware of climate risks and the associate investment opportunities. We predicted the long-term potential from environmental themed investments early, because of the substantial investment requirements the de-carbonisation agenda would require pressure from consumers on institutions to become more environmentally sustainable.
The shift towards a circular economy is creating a large and growing pool of investment opportunities for fund based investments, particularly mid-scale investment sizes where there is less competition for finance. We have identified compelling investment opportunities in the rapidly growing wind and water sectors that not only deliver healthy returns, but also leave the environment in better shape than before the investment.
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This entails significant potential as both sectors change and evolve in response to climate change and economic growth. This arises from reduced greenhouse gas emissions from generating renewable energy from wind farms and bioenergy plants; cleaner water and local environment from wastewater treatment; supplying clean water for industry, agriculture and drinking, reducing harmful emissions from industrial processes.
For instance, through our two wind energy funds, British Wind Energy Income I and II, all of our wind farm investments are making a net positive contribution to the local and global environment by reducing greenhouse gas emissions. The wind farms owned across the two funds collectively produce enough clean electricity to power c. 29,000 average sized homes per year in the UK.
The issue of water scarcity is contributing to considerable growth in the value of the industrial water treatment industry with over $250bn deployed on services and capex per annum worldwide.
Climate change, over-extraction and pollution are undermining our freshwater resources across many parts of the world, in particular in developing countries. By treating wastewater from a mining or chemical company, clean water can be pumped back into rivers without damaging ecosystems. Our investments are also combating the over-extraction of water resources in areas of water scarcity, for example, our plants in China recycle 60,000 tonnes of water per day.
As demand for cleaner sources of energy both in the UK and globally increases, and the shift towards a circular economy continues, the opportunities to invest in a variety of sectors including water treatment, renewable energy, batteries, resource recovery, and anaerobic digestion will continue to grow.
