White Stag Investing researches investments within key topics in sustainable finance that can be a source of stability, impact, and performance for investors in the long-term. From a bottom-up perspective, proper resources and pollution management are good measures of business diligence. By endorsing responsibility for their supply chain and externalities with circular and stakeholder approaches, companies become aware of potential pitfalls in their production and become more adaptive to sustain challenging environments. Moreover, such responsibility makes them also more acute to changes in social and regulatory environments and helps them keep their reputational capital and social license to operate intact, if not to capitalize on goodwill opportunities leading to higher sales.
From a top-down perspective, they are development thematics that are key challenges for our societies and economies in the 21st century and that can become investment themes for investors. I believe those themes to be the Circular Economy, Water, Oceans, and Agriculture. These themes are more accessible to private capital with existing products and markets. They preserve the ecological services of nature and foster sustainable use of resources. They further lay down at the very foundation of the challenges we face and their resolutions can generate greater impact down the line in many other areas like health, food, and energy. They drive on large economical drivers of climate change and planetary boundaries and are the areas of our world that need investment regardless of any economic situation. They represent therefore ideal long-term investment themes for investors with an embedded source of protection and upside potential. They can further be integrated as asset classes in their own rights in investors' portfolios and bring novel sources of performance and diversification.
Sustainablity as a Value
Sustainability, or the capacity to survive in the long-term, be resilient to change and adapt to new environments, is also a value for economic activity. It is actually an historic guidance for long-term investors. Some companies see this as part of their core strategy. They are conscious of their actions on an environmental and social scale and foster these aspects to generate value for all their stakeholders. This responsibility translates to better vision and governance through their supply chains and for their waste management, making them more performant, efficient, and resilient to face uncertainties. These are all sources of value for investors across many industries.
Water is not only the source of all life, but it is also the source of our entire modern civilization. Beyond the infrastructure serving our drinking and sanitary needs, it is also core to many industrial processes in agriculture, mining, energy, construction, and textile. Most often water is taken as a limitless resource that is used without little diligence for its quantity and quality. Yet the water cycle affects nature, its eco-systems, and eventually back to our societies and economies. The investment universe that deals with these issues are large and heterogeneous. These are various source of idiosyncratic resource for investors become an inherently diversified allocation.
Agriculture is the lifeline of our society. Decades of industrial farming, over-use of pesticides, and monocultures have degraded our soils and prevented them from fully regenerating. It has furthermore impoverished their eco-systems that provides (in-)valuable ecological services to grow healthy food. New regenerative techniques in agriculture aim to rebuild these eco-systems and their topsoil by holistically managing the entire agricultural supply chain. These techniques proved to deliver better quality food but also to be more profitable. This represents an attractive long-term investment opportunity for investors.
It is often said that our forests are the lungs of our planet, this would make our oceans its heart and its blood system. It is the first regulator of our climate and its preservation is on the front line of the fights in climate change. Many livelihoods are further built upon marines resources for not only food but income as well, and therefore represent the economic foundation for many markets. The Blue Economy is furth an eco-system of many economies: fishing, tourism, green shipping and ports, energy, and coastal resilience that are all sources of opportunities and diversification for investors. It is often considered to be the next frontier for sustainable growth.
Wetlands are often perceived as Wastelands, places of no value nor use. They are thus often disregarded and wiped out entirely. They however perform many great ecological services to nature and our society. They are natural filtrations systems for the water as well as storing carbon in the ground. They further act as natural barriers against sea surges and floods and protect local communities. They are therefore accessible and natural solutions that are cheaper and more effective than engineered solutions. This not only represents great investments for impact investors, but also very sensible investments for companies seeking to deal with water quality issues and carbon offsetting.