“World Oceans Day reminds every one of the major role the oceans have in everyday life,” the UN says of its annual international awareness day. To mark the occasion today, industry commentators have selected their top funds for tackling the most pressing issues facing our oceans.
Investing in water themes
Dominic Rowles, lead ESG analyst, Hargreaves Lansdown:
The team behind the FP WHEB Sustainability fund invest based on nine sustainable investment themes. These range from water management and environmental services to resource efficiency and cleaner energy.
The fund invests in a number of companies that positively contribute towards ocean health. For example, Smurfit Kappa is leading the shift from plastic to paper-based packaging. The materials used in its products are mostly renewably sourced and designed to be easily recyclable. Crucially though, if they happen to be littered, they will naturally biodegrade. Cardboard is not appropriate for every application, but new design innovations mean it has become the most popular alternative for companies committed to reducing plastic waste.
Several of the fund’s investments, including software firm Autodesk, water services company Ecolab and semiconductor manufacturer Infineon Technologies, are supporters of RE100, a network of companies committed to sourcing renewable energy and supporting public policy to accelerate decarbonisation of the electricity system. By contributing to the transition towards renewable energy, these companies are helping to combat climate change and address ocean acidification.
Investors should note that this fund looks very different to the broader global stock market, so it should be expected to perform differently too.
An oldie but a goodie
Charles Younes, head of manager selection, FE Investments:
Pictet Asset Management has a range of funds targeting specific megatrends that should provide long-term growth. Pictet Water was among the first to offer a well-defined exposure to the water theme, targeting companies involved in providing solutions to the global water challenge.
The fund invests across all areas of the global water industry, with a particular focus on water supply, water technology and environmental services. It invests in a number of companies which are developing technologies to reduce the harmful impact on the world’s oceans. These include companies aiming to improve the efficiency of sewage treatment as well as reducing the need for desalination as a source of water.
Sustainable krill harvesting
Jake Moeller, senior investment consultant at Square Mile Investment Consulting:
The team managing the UBAM Biodiversity Restoration global equity fund have a dual objective, in that they seek to deliver strong financial returns, while also investing in companies seeking to protect and restore the natural environment.
They seek to identify and invest in companies with the highest and purest degree of environmental impact, across one, or a number, of biodiversity-related themes; circular economy, planet-compatible utilities, green cities and urban spaces, and sustainable management of natural resources, enablers of change, planet-friendly diets, and sustainable food production.
Given that the managers and wider investment team seek to effect positive change relating to biodiversity and natural resource protection and restoration, it is pleasing to see that 3D’s analysis, which maps individual companies’ revenue to positive solutions, identifies a very high alignment of the fund with environmental solutions.
We classify the majority of the fund’s environmental solutions-based holdings under the heading of natural capital, which is applied to companies that are materially involved in sustainably managed natural resources, such as forestry, or water.
Another important and sizeable solution classification within the portfolio is sustainable food, accounted for by companies such as Aker Biomarine Antarctic AS, a Norwegian fishing and biotechnology firm that is dedicated to the sustainable harvest of krill and development of krill-derived biotech products. Their aim is to ensure the well-being of the krill biomass and the ongoing support of the Antarctic ecosystem.