Climate Change – Adaptation investments
(Thanks to Pengana WHEB for this source material)
2023 was the warmest year on record by a large margin. And Munich RE (a reinsurance firm), estimates that natural disasters caused $250 billion in financial losses in 2023 alone and over 74,000 lives were lost.
We keep hearing rhetoric about how we have to reduce emissions, but that very few of the large emitters actually want to put their hand up and change.
This means that the world will keep getting hotter, we will have more natural disasters and more people will die.
Reducing or stopping investment in fossil fuels is complicated. We still don’t have the infrastructure for everyone to use EV’s, with no Government subsidies they are more expensive and then there are tricky questions relating to the sourcing of the materials used in the batteries and disposing of the batteries.
In New Zealand, we don’t have effective public transport systems, and while we are a leader internationally in having our energy needs powered by renewable energy (eg Hydro, Geothermal, Wind, Sun), we still need the coal-fired power station at Huntly for our emergency and top up needs.
Another way to get your money working well is to invest in ‘Climate Adaptation’. These are companies that produce products and services to help communities and businesses to adapt to the climate change issues.
Some examples of where Pengana WHEB is investing in Climate Adaptation companies are Advanced Drainage Systems (ADS) and Arcadis.
ADS sells plastic stormwater pipes in America. The company’s products are crucial for helping communities become more resilient to flooding. ADS has seen huge revenue growth and margin expansion as its products are increasingly seen as critical infrastructure.
Arcadis are environmental consultants that support climate adaptation. They have been working on projects to shore up flood defences – (Links at the bottom of this blog post), transform concrete jungles into green spaces and create stormproof sewers.
Arcadis have seen rapidly increasing demand for their services over the last few years, all around the world.
The UN estimates that spending $1.8 trillion on a variety of adaptation projects could generate four times that amount in avoided costs and benefits.
By investing in companies that are dealing with climate change adaptation, through your investment portfolio, you are actively investing to do something about the issues caused by climate change.
Links to Arcadis projects
https://www.arcadis.com/en/projects/europe/france/forets-urbaines-a-paris
https://www.arcadis.com/en/projects/europe/netherlands/utrecht-rioolwaterzuivering
