A clear case for responsible investing

Water dripping from a tap Responsible Investing

Investing

Amanda Young

25th October 2016 at 8:00am

Good Money Week – 30 October – 5 November 2016

Good Money Week raises awareness of sustainable, responsible and ethical finance to help people make good choices around responsible investing, writes Amanda Young.

The UK, as is true for the rest of the world, faces challenges such as scarce resources, growing populations, weather events and social and environmental pressures.

It is issues such as these that have lead many of us to consider ethical-type investing.

Encouraging investors

Good Money Week is dedicated to encouraging investors to consider responsible finance options in their decision making. How companies behave and the products they manufacture have an impact on the communities in which they operate, as well as the wider environment. Their reputation, performance, and shareholders’ returns may depend upon it.

Water is a good example of this. An essential, but increasingly scarce and expensive resource, water has been managed poorly in the past, threatening the growth of some of the world’s leading economies and impacting the local communities which rely on it.

The World Bank estimates China’s GDPGood Money Week is dedicated to encouraging investors to consider responsible finance options in their decision making. reduces 2.3% every year due to water scarcity and pollution(1). Nearly a billion people have no access to safe drinking water(2) and around 500,000 children die every year due to unsafe water and poor sanitation(3). By 2025, the United Nations estimates 1.8 billion people will live in regions with extreme water scarcity(4)

While these figures are alarming, companies have the ability to manage such an important resource in a way which balances their needs with the communities which rely on it.

Agriculture & water stewardship

Agriculture accounts for 70% of all water consumption with global businesses such as General Mills, Nestle, Danone and Coca-Cola relying on cotton, wheat and sugar­, industry uses 20% and 10% is used domestically(5).

Companies have invested an estimated $84bn worldwide in good water stewardship since 2011 –investment which, in turn, helps ensure their sustainability(6).

Take MillerCoors, the joint venture between SABMiller and Molson Coors. It harnesses technology to brew one barrel of its beer using three and a half barrels of water. The US beer industry average is six barrels.(7)

Others develop technologies and processes to offer solutions to some of the global water challenges, including leak detection, water reuse and the desalination of sea water.

Over the past five years, global desalination has increased 57% to 20 billion gallons a day(8) benefiting companies such as GE and Veolia Environnement. Dow Chemical’s water treatment is bringing clean, affordable water to more people around the world.

With Good Money Week raising awareness of how money is managed, it is well worth considering the role investors can play. Through our investments we are able to encourage better water stewardship by the companies we invest in, making them more secure and benefiting the communities and environments dependent on that water.

Standard Life Investments sponsors Good Money Week: www.goodmoneyweek.com

Sources:

  1. World Bank, Addressing China’s Water Scarcity: Recommendations for Selected Water Resource Management Issues, 2009
    http://bit.ly/2dEPttV
  1. UNICEF, Children dying daily because of unsafe water supplies and poor sanitation and hygiene, UNICEF says
    http://uni.cf/2eNq52o
  1. UNICEF, Committing to Child Survival: A Promise Renewed – Progress Report 2014, September 2014.
    http://bit.ly/1yi0rsZ
  1. UN Water (2007). Coping with water scarcity: challenge of the twenty-first century. Prepared for World Water Day 2007 http://bit.ly/2eAty6H (last accessed 23 March 2007)
  1. AQUASTAT – by the Food and Agriculture Organization of the United Nations (FAO): Information System on Water and Agriculture
  1. International Desalination Association (IDA) and Global Water Intelligence (GWI) data 2012
    http://bit.ly/2eC5Sw7
  1. Sustainable Brands, SABMiller Aims to Help the World ‘Prosper’ with New 2020 Goals
    http://bit.ly/2eqiDyj
  1. Financial Times, A world without water, 2014
    http://on.ft.com/2eqhAOV 

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