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Our planet: four Earth Day investment themes

From waste in the fashion business to organic farming, four investment professionals share their environmental anxieties with us – and where they see opportunities

With Earth Day just behind us and the David Attenborough narrated Netflix documentary series Our Planet capturing viewers' imagination, it's a good time to take stock of how conservation could impact the global economy.

From waste in the fashion business to organic farming, four investment professionals share their environmental anxieties with us and reveal where they see opportunities.

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With Earth Day just behind us and the David Attenborough narrated Netflix documentary series Our Planet capturing viewers' imagination, it's a good time to take stock of how conservation could impact the global economy.

From waste in the fashion business to organic farming, four investment professionals share their environmental anxieties with us and reveal where they see opportunities.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Fast fashion

Esme van Herwijnen, Responsible investment analyst at EdenTree IM

A linear economy, one where we take materials and make and dispose of products, is no longer viable in a world with a growing population and fast depleting resources.

The textile industry is the perfect example of the linear model we currently have. 97% of materials which go into the making of clothes are virgin materials, mostly a plastic and cotton mix. However, after use, 73% of clothes are landfilled or incinerated; this amounts to 500,000 tonnes or 1 billion items of clothing sent to landfill annually. 

For investors, there are many opportunities to invest in companies that provide solutions to the waste problem or have adopted a circular approach to their business models. These are likely to benefit from the need to use resources more efficiently and to divert economically valuable waste streams.

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Organic farming

Hilde Jenssen, fundamentals equity team product manager at Nordea AM

While the market for healthy food is enormous, the percentage of organic farmland is only inching up and amounts to less than 10% of total farmland in Europe and a meagre 1% in the US.

Organic farming requires different equipment and other up-front investments and it requires more labour, mainly to deal with weeds. Regulations also require crop rotation, which limits the crops produced in a given year.

To optimize production and help farmers commercially, big brands are getting involved. PureCircle (PURE) produces the natural sweetener Stevia – the stevia plant is about 40 times sweeter than sugar, requires less growing space and can be harvested up to four times per year, providing a steadier income for farmers.

Another example is Unilever Hindustan, which helps 8,000 Indian farmers optimize growing tomatoes on more than 11,000 acres of land.

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Biodiversity

Henry Boucher, partner and deputy CIO at Sarasin & Partners

The World Wildlife Fund (WWF)’s Living Planet Index measures the abundance of 3,706 vertebrate species. Its 2016 audit shows that global populations of fish, birds, mammals, amphibians and reptiles declined by 58% between 1970 and 2012 and the decline could reach 67% by 2020.

The value we gain from a properly functioning ecosystem is taken for granted and the threat is very hard to see. The WWF data is therefore a very important chink of light that allows us to measure the problem.

Clinically, we can view biodiversity loss as an economic problem containing elements of inefficient pricing and market failures, including insufficient incentives and resource misallocation. But it is a problem of such scale that it must combine educational, political, legal and economic responses.

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Plastic pollution

Sawan Kumar, Stewardship analyst at Evenlode Investment

Plastic pollution is acting as a key catalyst for society to transition more rapidly towards a circular economy. It is also, increasingly, becoming a focus for many of the companies we analyse and invest in our Global Income Fund. 

Unilever (ULVR), for instance, is becoming a leader in tackling the issue of plastic pollution by finding alternatives to this incredibly versatile material. In April last year, the company became a founding member of the UK Plastic Pact which aims to eliminate unnecessary single-use plastics through re-design, innovation or finding alternative methods to packaging by 2025.

The company is investing into a low-cost alternative to single-use laundry sachets which is completely free from plastic. The new product dissolves in water and has a plant-derived coating to protect against humidity in the developed markets.

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Henry Boucher
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