White Stag Investing covers key investment themes at the frontier of sustainability which can be a source of long-term stability, impact and performance for investors. From a bottom-up perspective, sustainability can be a source of value when it is authentically integrated into the strategy and governance of a company. Proper resource and pollution management reduce respectively operational costs and regulatory risks, whilst monitoring supply chains and collaborating with stakeholders can reduce supply risks and increase business resilience. Companies taking responsibility to ensure human rights and environmental integrity within their sphere of influence are also better equipped to navigate a change in values in markets and to foster their reputation capital. A growing social and environmental awareness in society is indeed reshaping the regulatory landscape and what constitutes an adequate social license to operate for businesses, representing new risks for their investors.
Change in the investment landscape is also growing from a top-down perspective, where modern energy, food and water systems are being challenged by the emerging risks of climate change, biodiversity loss and water insecurity. These systems are foundational to our modern economies but they are wholly unprepared to face these new environmental challenges. These do not only represent new financial risks for investors that have the capacity to cascade through their portfolios, but they also offer a myriad of opportunities to rebuild these systems and prepare them for the new environmental reality of the 21st century. White Stag Investing is further specialised in the investment themes of water, oceans and biodiversity which are deeply interwoven into these economic and natural systems and whose relevance is gaining traction at the frontier of sustainable investing. Contact us to find out about the new risks and opportunities in these spaces.
Water is not only the source of all life, but it is also the lifeblood of modern economies. Beyond the infrastructure serving drinking and sanitary needs, water is also a core production factor for almost any industrial process with striking examples in agriculture, mining, energy, construction, IT, pharmaceuticals, semi-conductors, real estate and textiles. Water has been historically perceived as abundant, clean and cheap and little diligence was therefore given to manage its quantity and quality. This perception is however now coming to an end with the emerging challenges of climate change, water pollution and scarcity which are eroding water supplies globally. There is therefore a need to revamp the fundamental water infrastructures of our societies to adapt them to the new environmental reality and therefore ensure long-term societal prosperity. This generational rebuilding effort represents an array of opportunities for investors to support new solutions across the water value chain, with for example new innovations in the sub-themes of Digital Water, Ecological Chemical Components, Resilient Infrastructures and Sustainable Water Management. The water industry is currently valued at USD 500 billion globally but it is arguably expected to grow throughout the century to deal with growing environmental challenges and delivering on their necessary solutions.
It is often said that forests are the lungs of the Earth, this would make the oceans its heart and blood system. Oceans not only regulate climates across the globe but they also represent the food supply for billions of people through fishing, aquaculture and seaweed farming. They are also the heart of the modern economy and its trading routes through shipping. Oceans are however under severe stress as they have been absorbing 90% of the carbon emissions emitted by the modern economy and this is leading to their acidification, stratification and the loss of their major ocean currents. These challenges represent major systematic risks for modern economies as they could lead to drastic climate change across the globe and the collapse of the marine food chain which billions depend upon. There is therefore a need to manage the oceans as a global natural infrastructure and bring its Blue Economy to sustainability. This also represents an array of opportunities for investors to support new sustainable projects and innovations throughout the sectors of sustainable fishing, aquaculture, seaweed farming, seafood processing, green shipping, green ports, coastal resilience, pollution control and marine protected areas. The Blue Economy is estimated to be worth $1.5 trillion annually and its natural capital is worth a total of $24 trillion. Oceans are therefore a valuable infrastructure that needs maintenance and servicing to continue benefitting the economy, nature and humanity.
Biodiversity is growing in importance in sustainable finance and for good reasons. Biodiversity represents the complex web of life of the Earth and is also the fundamental supporting system for major sectors like agriculture and healthcare. Soil biodiversity (topsoil) and pollination services from bees and insects are fundamentally necessary for the cultivation of most crops and their preservation is therefore essential for global food security and its associated social stability. Growing agricultural pollution and unsustainable practices are indeed eroding these ecosystem services, putting the future of the agricultural industry at risk and running the risk of brewing social instabilities across the world. Similarly, the healthcare sector is relying on the marine biodiversity found in coral reefs for its new drug developments and is similarly at risk of losing this source of innovation as a 2° C world means the end of 99% of coral reefs worldwide. These are only a few examples where almost all of the economy is depending on nature in one way or another. The business world is waking up to this fact with new risk frameworks and data methodologies being developed to better understand its dependencies and impacts on nature. These will soon start redirecting investments and influencing all financial flows, making soon these considerations relevant to all investors. Investors can start their work on their biodiversity footprints to stay ahead in this trade. The development of new tools to measure, monitor and manage their biodiversity impact is also a source of opportunities for investors to support the conservation of life throughout the economy.