Unlock Sustainable Water Investment Opportunities for a Positive Water Future!

Explore the pivotal theme of sustainable water, where companies innovate in infrastructure, technology, and services to manage and treat water resources sustainably. Discover the driving challenges, market trends, and investment opportunities in a sector crucial for global environmental well-being.

Unveiling Sustainable Water

Water, the elixir of life, is facing unprecedented challenges in the modern world. The sustainable water theme revolves around companies dedicated to managing this precious resource more efficiently and the modernization and expansion of essential water infrastructure systems. As less than 1% of the world's water is clean and accessible, the demand for sustainable water solutions becomes crucial given global population growth, rapid urbanization, and impacts of climate change, such as droughts. In this newsletter, we delve into water sustainability, its challenges, market trends, and why investing in this sector is not only financially sensible but also ethically responsible.

The Challenge: Water Scarcity & Quality

Over 97% of the earth's water is found in the oceans as salt water. 2% of the earth's water is stored as fresh water in glaciers, ice caps, and snowy mountain ranges. Less than 1% of the world's water is fresh and readily accessible and of the appropriate quality, and yet, the demand for freshwater is perpetually on the rise due to population growth, industrial operations, expansion, and agricultural needs. 

Water is a basic human right and it is a critical dependency for a wide range of companies and industry sectors such as consumer consumables, households, municipalities, agriculture, pharmaceuticals, semiconductors, mining, and electric power that support our everyday lives.

These challenges necessitate innovative solutions in infrastructure, technology, and services to ensure the sustainable management of water resources.

Technology's Role: A Game-Changer

Technology emerges as a pivotal player in meeting the water scarcity challenge. Smart meters, flow control mechanisms, and precision farming technologies are revolutionizing how we use water. From reducing leaks to optimizing water and nutrient use in agriculture, technology is at the forefront of sustainable water management.

Why invest in sustainable water now?

The following indices stand as a testament and benchmark for the longer-term success and potential of water-related businesses.

With a steady annualized return of 8% over the past 5 years and an ESG score of 70/100, the S&P Global Water ETF comprises 50 of the largest companies globally engaged in water-related businesses, evenly distributed between water utilities & infrastructure and water equipment & materials.

Similarly, the Invesco Water Resources ETF focuses on companies creating products designed to conserve and purify water for homes, businesses, and industries. This ETF provides a consistent annualized return of 10% over the past 5 years and an ESG score of 67/100.

Finally, First Trust Water ETF focuses on companies delivering potable water and wastewater industries. This ETF offers a healthy annualized return of 11% over the past 5 years and an ESG score of 66/100.

Overall, this demonstrates a stable and attractive sustainable investment opportunity for individuals. 

What is driving the future market growth?

Despite significant advancements, billions of individuals still face the challenge of inadequate access to safe drinking water, sanitation, and hygiene. To attain universal coverage by 2030, there is a pressing need for a substantial acceleration in the current global rates of progress: a sixfold (6X) increase for drinking water, a fivefold (5X) increase for sanitation, and a threefold (3X) increase for hygiene. 

While there has been a 9% improvement in water use efficiency, concerns persist about water stress and scarcity in various parts of the world. In 2020, 2.4 billion people resided in countries experiencing water stress. These challenges are further exacerbated by conflicts and the impacts of climate change.

Historic U.S. Legislative Landscape: The Impact of the Bipartisan Infrastructure Deal

The 2021 United States Bipartisan Infrastructure Deal (or Infrastructure Investment and Jobs Act) plays a pivotal role in shaping the water access and sustainability landscape. Legislative measures and policy changes have the potential to influence the demand for pollution control technologies, upgrading infrastructure, wastewater treatment equipment, and consumables.

This historic legislation aims to ensure access to clean water for every American family and eradicate the nation's lead service lines. Presently, as many as 10 million households and 400,000 schools and childcare centers in America lack access to safe drinking water. The Bipartisan Infrastructure Deal is set to allocate $55 billion to enhance access to clean drinking water for households, businesses, schools, and childcare centers nationwide. This legislation aims to invest in water infrastructure, removing lead service pipes from rural towns to struggling cities, including Tribal Nations and disadvantaged communities that are most in need.

Global Initiatives: COP28 & EU

United Nations COP28 Goals: A Global Commitment

In November and December of this year, global leaders will gather for the United Nations COP28, a critical conference addressing environmental challenges. COP28 announced its top priority areas, which include conserving and restoring freshwater ecosystems, enhancing urban water resilience, and bolstering water-resilient food systems.

According to the United Nations Sustainable Development Goals, access to safe water, sanitation, and hygiene is the most basic human need for health and well-being. Billions of people will lack access to these basic services in 2030 unless progress quadruples (4X).

EU Green Deal: Paving the Way for Sustainability

The EU Green Deal is a transformative initiative that aligns with the broader goal of sustainable water practices. By fostering a circular economy (i.e. reuse and regeneration) and emphasizing environmental responsibility and protection, the EU Green Deal creates a conducive environment for investments in water sustainability.

Water will assume a crucial role in various policy areas outlined in the EU Green Deal, notably in clean energy and industry, biodiversity of land, rivers, lakes, and oceans, environmentally friendly food, and eliminating pollution. 

This trajectory aims to build “water-smart societies” in which the value of water is recognized and realized to ensure water security, sustainability, and resilience.

Make sustainable water your investment habit

In conclusion, water sustainability transcends being merely an investment opportunity; it stands as a global imperative. With challenges such as water scarcity and quality becoming more prominent, investing in companies committed to sustainable water management and development is not only financially wise but also ethically responsible. By adopting water sustainability investments, individuals play a role in fostering a resilient and eco-conscious future.

As the demand for sustainable water services and solutions continues to rise, companies in this sector find themselves on the brink of substantial growth. As discussed, the market's expansion in water sustainability isn't merely a passing trend; it represents a fundamental shift toward responsible resource management, development, and fulfilling a basic human right. Investors who leverage this trend position themselves for long-term success.

This is your chance to take advantage of this opportunity. Make building wealth your green habit of a lifetime!

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Fun fact

The reduction in water consumption in a home achieved by installing low-flow faucets and showerheads can be around 20% to 30%. This would be 2.8 trillion gallons of water saved in the United States per year. This equates to 140 million swimming pools or 448 billion bottles of water. 

Free newsletter content

Every two weeks with our newsletter distribution, we will discuss the market trends in one of our six themes below:

1. Renewable Energy (think solar, wind, hydroelectric)

2. Resources (think hydrogen)

3. Circular Economy (think water)

4. Energy Storage (think battery power grid)

5. Carbon Capture and Storage (think Carbon dioxide CO2 capture)

6. Green Transportation (think electric vehicles)

Premium newsletter summary

In this newsletter, we have selected five established (since 1853, 1874, 1960s, and 2000s) companies that focus their business on various aspects of this sustainable water market theme with 1-year annual returns ranging from 42% to 16% from large ($22 billion) to small ($5 billion) size businesses.

We also include their Environmental, social, and governance (ESG) score. The ESG data focuses on sustainability, diversity, human rights, license to operate, business ethics, and corporate governance. Using 630 metrics, ESG scores provide a comparison of a company's practices with their industry peers.

Return Habit donates 2% of annual profits to underserved communities for green jobs and education. These jobs and training are critical for our community and economy.