For a transition from a resource-intensive economy to a sustainable economy, it’s essential to reduce demand for non-renewable natural resources. They should be used as efficiently as possible and, when possible, renewable natural resources should be used.
As an impact investor, Triodos Investment Management selects companies that develop solutions to the world's most critical sustainability challenges. We have defined seven transition themes that will be instrumental in securing a sustainable future. These themes, which have been derived from global mega-trends that we believe will shape the future, guide the portfolio construction of our listed equity and bond funds, making sure we only invest in sustainable frontrunners.
In a series of seven articles, we explore the transition themes more in detail and present concrete investment solutions. In this article, we focus on renewable resources.
Renewable resources are natural resources that can be replenished naturally in the course of time. Some renewable resources, such as solar and wind energy, have essentially an endless supply. Other resources take time and effort to renew, such as water, wood and oxygen. Although it will take a very long time to replenish them, many precious metals are also considered renewable. They are often not destroyed during extraction and use and can therefore be re-used.
The energy sector will need to undergo a deep transformation, including full decarbonisation of the power sector. We strive for a 100% renewable energy system that enables sustainable economic development and limits the rise in global temperature to well below 2˚C. Renewable energy can take different forms: solar, wind, hydro, geothermal. We exclude nuclear energy, because it is inherently unsafe and the issue of nuclear waste as yet unresolved.
We also need to find more renewable (bio-based) raw materials as feedstock for industrial processes. Demand for raw materials, such as oil, metals and minerals, will continue to increase. Instead of tackling the projected production shortfall by stepping up the exploration, we should optimise the use and recycling of these raw materials (although low concentrations can make this technologically highly challenging). We should also develop alternative materials that will provide the functionality needed in the application. This is the only natural way to reduce dependence on raw materials that are in limited supply. When new water facilities are designed, or existing water structures modernised, attention must be paid to sustainability. We favour the integration of water systems to better align supply and demand, delivering the ‘right water for the right need’, reducing treatment costs and the length of pipe needed to fulfil specific water needs. We also need water systems that use, treat, store and reuse water and energy more efficiently. Furthermore, we must start extracting the significant resources (nutrients and energy) found in wastewater rather than discarding them as waste.
Investing in renewable resources
Our impact equity and bond funds invest in companies that offer solutions towards a zero-carbon energy system. Companies that generate green sources of energy would qualify. Manufacturers across the clean energy value chain, such as solar panel producers, windmill producers, companies providing energy storage solutions, such as battery storage developers, and developers of smart grid technologies, are also investable.
We invest in suppliers of bio-based raw materials. Companies active in the field research of new bio-based materials may also be interesting. In our assessment we are always careful, however, that the production of bio-based materials does not compete with agricultural resources to produce food.
Our funds seek to finance the transition to more integrated water systems. Solutions that improve water and energy efficiency along the water value chain are also interesting.
Evoqua Water Technologies – Transforming water, enriching life
US-company Evoqua Water Technologies is a leading provider of water and wastewater treatment solutions, thus helping to protect and improve the world’s most fundamental natural resource: water. The company delivers products, solutions and services to ensure water quality and consistency for municipalities, industrial water users and recreational facilities. Evoqua Water Technologies serves customers in different countries but generates most of its revenues in North America.
The company also supports local municipalities offering a suite of treatment and disinfection solutions to provide clean drinking water to communities
Kuraray – For people and the planet—to achieve what no one else can
Kuraray, founded in 1926 in Japan, is a specialty chemical and fiber manufacturer producing special resin, man-made leather, fine chemicals, and non-woven fabrics used as apparel and industrial materials. Kuraray also produces air and water filtration products, pharmaceutical and medical products such as dialyzers and dental-care products.
The company focuses on developing products and materials that help reduce environmental impact, such as water and air filtration, materials for electric cars and batteries, biodegradable food and detergent packaging, glass interlayer films, etc.
Vestas Windsystems - Making wind work
Vestas Wind Systems, headquartered in Denmark, is among the largest producers of wind power systems worldwide. The company designs, manufactures, installs, and services wind turbines across the globe. It offers a broad range of wind turbines that are able to operate under different wind circumstances.
Vestas is the only global energy company dedicated exclusively to wind energy and offers the largest and most efficient wind turbines with a capacity of >4MW. The company is a global market leader in onshore wind with a total capacity that equals some 17% of wind power capacity installed, and, through its joint venture with Mitsubishi, also one of the major players in offshore wind with a market share of approximately 25%. Vestas wants to reduce its carbon footprint by 10 percent by 2020 (from a baseline of 6.60 grams CO2 per kWh in 2017) by improving and optimizing wind turbine performance through technology development and innovation, as well as lowering material and energy consumption in our factories and within the supply chain.