Top performing PMs take advantage of alternative ideas to tackle heavy water use
The issues surrounding water consumption are not a new phenomenon, but the acceleration of uses and floods have led to an increased need for alternative thinking in this area.
Dieter Küffer of RobecoSAM, who is Citywire’s top performing manager in Citywire’s Equity – Water sector on a three-year basis, has adjusted his € 2.3 billion RobecoSAM Sustainable Water Equities fund to address the new challenges.
Talk to Citywire selector, Küffer said: “Water challenges today are similar to those we faced decades ago, if not increased due to the global increase in population. They range from drafts, increasing demand for water to flooding. ‘
Küffer, who has led the specialty fund since its launch in 2001, has added sub-themes over the years to accommodate changing technology and the expanding water universe.
“For example, in the 2010s, we created a sub-theme for water waste, because water waste has a strong correlation with environmental pollution. We have also increased our exposure to the analytical space. Water testing is essential for identifying what’s in the water, knowing what needs to be treated, and then dealing with water pollution.
“Today we find pesticides in the water, as well as drug residues that are flushed out of the toilets into the sewage when people take drugs,” Küffer added.
Küffer said traditional water treatments don’t deal well with chemical-based micropollutions. Bacteria are another problem, which must be dealt with with new modern technologies.
According to the fund’s latest fact sheet, which covers the period until the end of April 2021, Küffer’s fund holds water treatment names such as the US Ecolab Inc in its top 10 positions, with 2, 43% of fund assets allocated here.
Küffer added that water treatment is increasingly taken into account by various actors, including public policies. “Switzerland will invest around 1 billion Swiss francs to modernize 100 domestic wastewater treatment plants in order to eliminate this micropollution,” he added.
Focus on agriculture
Küffer has also moved to “resource protection” in the fund in recent years, which is a sub-sector comprising technologies that help protect natural resources and prevent water pollution.
His fund increased its allocation to resource protection in 2020 from 3% to 10% of total exposure due to bottom-up analysis and increased exposure to plant-based companies.
The inclusion of plant-based businesses decreases the agricultural impact of the fund, as the agricultural sector is extremely dependent on water. “In the global space, 70% of water is used by agriculture,” said Küffer.
Animal cultures are an inefficient way to produce protein for humans, Küffer said, because it can take 10 times the volume of water to produce meat.
Küffer believes plant protein can save water and has allocated it to ingredient suppliers and companies that process plant protein, such as companies involved in soybeans and protein separated from the rest of the bean.
Likewise, Citywire + noted Nedim Kaplan, who has headed the ÖkoWorld Water Life fund since 2016, is very selective when it comes to agriculture. His fund focuses on organic farming, as there is massive pollution of the agricultural industry, especially in conventional farming.
Kaplan said conventional food businesses and conventional agriculture are often taxed as a lawless for the fund. “Conventional generally means the use of pesticides, which damage the soil.”
The main investment thesis of his ÖkoWorld Water Life fund focuses on companies that are part of the solution to save and conserve water in the context of climate change and population growth.
The fund, which manages € 58.9 million in assets under management, falls under the Klimaschutz sub-theme (“climate protection”), which represents 28.16% of the strategy’s assets, according to the latest fact sheet. April 2021 fund information.
Like Küffer’s ideas around protection, Kaplan’s sub-theme aims to preserve and save water by investing in substitutes that consume less water, for example.
Kaplan said water consumption is generally high in the textile industry. To address this, the fund invests in innovative fibers derived from wood-based pulp, which are produced by companies such as Austria-based Lenzing.
The fund also allocates renewables in line with the idea that they can help save more energy than nuclear power.
Küffer has implemented strict exclusions for the RobecoSAM fund in order to encourage sustainable practices on a daily basis. For example, he excluded bottled water from the fund’s investment universe.
“Bottled water is transported on long journeys, which is not an efficient way of distributing water from the point of view of CO2 emissions. “
It makes sense to buy bottled water when the water quality is poor and there is no domestic water treatment, Küffer said, but he argued that the use local treated water is one way to reduce CO2 emissions.
In addition, bottled water raises another issue, that of spring water rights. Küffer said companies that pump large amounts of bottled water could create a shortage for local farmers, which has happened in North America in the past.
From an environmental perspective, plastic bottles are a challenge as the bottles end up polluting the ocean, lakes and rivers. With bottled glass water, the problem lies in their transportation, Küffer said. “It is heavy, it consumes more energy and emits even more Co2”, he added.
At company level, Küffer’s practice also tries to encourage sustainable practices on a daily basis. For example, RobecoSAM has partnered with the city by the sea organization, which provides a water filling unit in London and other cities, which helps reduce the use of plastic bottles.