Allianz Global Investors, one of the world’s leading active asset managers, announced today the appointment of Matt Christensen as Global Head of Sustainable and Impact Investing. In this role, he will accelerate the growth of Impact Investing as part of the company’s growing private markets platform; lead the continued integration of ESG factors across AllianzGI’s existing range of public markets products, including stewardship activities; and support the development of new SRI products.
With rising population and changing lifestyles, drinking water supplies are under increasing pressure. More investment in an increasingly outdated water infrastructure is needed to make more efficient and effective use of this valuable resource.
The price of water does not fully reflect its importance
Demand for water is still growing and supply bottlenecks can easily occur without sustained investment in efficient water supply and wastewater treatment
In the developed world, a significant part of water infrastructure is nearing the end of its life cycle
Investors may benefit from companies offering “smart water” solutions
One litre of tap water usually costs less than a cent in industrialised countries - that is very little for a vital and finite commodity with no possible substitute. Clean tap water is taken for granted by most people in the developed world. So it can be easy to forget how easily supply bottlenecks could occur without sustained high investment in an efficient water supply and wastewater treatment.
The hot, dry summer of 2018 led to an increased occurrence of pronounced periods of drought in temperate climate zones all around the world. As a result the focus was primarily on the long-term effects of climate change.
But the impact of both humans and the economy on water use and water pollution is much more direct. In many cases, outdated water pipes mean only part of the drinking water supply arrives where it is needed. Outdated irrigation systems and methods are responsible for further unnecessary waste of water. Meanwhile 40-50% of water consumption in industrialised countries is used for cooling water for power generation in coal-fired or nuclear power plants.
While a shift in energy generation means less water will be needed for that purpose in future, the growing world population – and specifically the growing middle class, and its impact on eating and consumption habits – is likely to put the remaining drinking water supplies under even more pressure.
This makes it all the more important to handle industrial and waste water carefully and treat it properly. Even very low concentrations of bacteria or pollutants in water pose a considerable health risk for humans and animals. Water protection is of vital importance in all industrialised countries so it is only logical that it sits under state or public supervision – regardless of whether the actual water supply is in private or public hands.
The most effective method of water protection is, of course, not to allow pollutants to enter the water cycle in the first place. But even if this were possible to guarantee, it would still be necessary to treat waste water to turn it into tap water of drinkable quality. To achieve this, physical filters and chemical filtration processes are used in a multi-stage process which requires closed-pipe systems as well as highly developed filtering, diagnostic and monitoring technology.
In most developed countries, massive investment in water infrastructure coincided with rapid urbanisation at the beginning of the 20th century. More than 100 years later, this infrastructure has reached the end of its life cycle and needs to be replaced.
In the last 10 years, however, the scarcity of public funds, especially in the wake of the financial crisis, has led to a reluctance to invest in water infrastructure. Currently, the investment required to achieve the UN's sustainable development goal 6 (SDG 6) of clean water and sanitation worldwide by 2030 is estimated at approximately USD 1.7 trillion. This investment backlog is likely to begin to reduce now as ongoing debates about water quality and emerging supply bottlenecks drive the development of so-called "smart water" solutions. Some of the providers of these solutions and the technology powering them are listed on the stock exchange so that investors can also benefit from direct exposure.
Political and demographic changes are driving huge changes in water provision in both developed and emerging economies. While water remains cheap, it is priceless, so the need to respond to these changes will create opportunities in the infrastructure and technology behind its treatment and delivery.
About the author
Andreas Fruschki, CFA
Head of Thematic Equity, Senior Portfolio Manager
Andreas Fruschki is Head of Thematic Equity. He is responsible for research focused on global themes and also oversees various thematic funds for Allianz Global Investors, which he joined in 2005. As PM, he manages the Allianz Global Thematica and AllianzGI Water strategies. Previously, he headed the European Equity Research Department of AllianzGI. He has 15 years of investment-industry experience.
Access to credit, currency depreciation and changes in the government generally have not had a significant impact on corn and soybean farming in Brazil. Going forward, at least half of sources in each instance expect spending on nitrogen, phosphate, potash and farm equipment to remain flat compared to last year.
Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. [*] Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security.
The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted.
This material has not been reviewed by any regulatory authorities. In mainland China, it is used only as supporting material to the offshore investment products offered by commercial banks under the Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations. This document does not constitute a public offer by virtue of Act Number 26.831 of the Argentine Republic and General Resolution No. 622/2013 of the NSC. This communication's sole purpose is to inform and does not under any circumstance constitute promotion or publicity of Allianz Global Investors products and/or services in Colombia or to Colombian residents pursuant to part 4 of Decree 2555 of 2010. This communication does not in any way aim to directly or indirectly initiate the purchase of a product or the provision of a service offered by Allianz Global Investors. Via reception of his document, each resident in Colombia acknowledges and accepts to have contacted Allianz Global Investors via their own initiative and that the communication under no circumstances does not arise from any promotional or marketing activities carried out by Allianz Global Investors. Colombian residents accept that accessing any type of social network page of Allianz Global Investors is done under their own responsibility and initiative and are aware that they may access specific information on the products and services of Allianz Global Investors. This communication is strictly private and confidential and may not be reproduced. This communication does not constitute a public offer of securities in Colombia pursuant to the public offer regulation set forth in Decree 2555 of 2010. This communication and the information provided herein should not be considered a solicitation or an offer by Allianz Global Investors or its affiliates to provide any financial products in Brazil, Panama, Peru, and Uruguay. In Australia, this material is presented by Allianz Global Investors Asia Pacific Limited (“AllianzGI AP”) and is intended for the use of investment consultants and other institutional/professional investors only, and is not directed to the public or individual retail investors. AllianzGI AP is not licensed to provide financial services to retail clients in Australia. AllianzGI AP (Australian Registered Body Number 160 464 200) is exempt from the requirement to hold an Australian Foreign Financial Service License under the Corporations Act 2001 (Cth) pursuant to ASIC Class Order (CO 03/1103) with respect to the provision of financial services to wholesale clients only. AllianzGI AP is licensed and regulated by Hong Kong Securities and Futures Commission under Hong Kong laws, which differ from Australian laws.
This document is being distributed by the following Allianz Global Investors companies: Allianz Global Investors U.S. LLC, an investment adviser registered with the U.S. Securities and Exchange Commission; Allianz Global Investors Distributors LLC, distributor registered with FINRA, is affiliated with Allianz Global Investors U.S. LLC; Allianz Global Investors GmbH, an investment company in Germany, authorized by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Allianz Global Investors (Schweiz) AG; Allianz Global Investors Asia Pacific Ltd., licensed by the Hong Kong Securities and Futures Commission; Allianz Global Investors Singapore Ltd., regulated by the Monetary Authority of Singapore [Company Registration No. 199907169Z]; Allianz Global Investors Japan Co., Ltd., registered in Japan as a Financial Instruments Business Operator [Registered No. The Director of Kanto Local Finance Bureau (Financial Instruments Business Operator), No. 424, Member of Japan Investment Advisers Association and Investment Trust Association, Japan]; and Allianz Global Investors Taiwan Ltd., licensed by Financial Supervisory Commission in Taiwan.
[*Subject to change – depends on the content of the material which may mention certain investment instruments that involve particular risk]