Investing in safe and clean environment for our children

Children all over the world are living in an environment that is increasingly affecting their development in a negative way. The importance of a safe and clean environment for children extends beyond climate change. Facts are that:

• Two billion children currently breathe polluted air.
• Nearly one billion children are already experiencing water scarcity.
• Plastic waste is negatively affecting children in many ways.

Investors who take the wellbeing of children to heart, can make a difference by investing in a clean and safe environment. 

The importance of clean air

Breathing in polluted air is bad for anyone, but especially for children. Research from the European Environment Agency reveals some interesting facts. Children have a higher breathing frequency and tend to use their mouth more when breathing in, thus inhaling more pollution than adults. And as they are smaller, children also breathe in air that’s more polluted, because air closer to the ground is typically more polluted. Because their bodies are still developing, children are more vulnerable to the consequences of breathing in polluted air. Clean air is therefore even more important for children than for adults.

Many things can be done to reduce air pollution, but most will take time to sort effect. For example through better urban planning children can be kept away from the larger pollution emitters. A solution with more immediate effect is good ventilation. This is where Genuit, a holding of Triodos Future Generations Fund, comes in. This UK company provides sustainable building products, with special focus on ventilation. The company recently strengthened its position on the market for educational buildings by acquiring the specialised company Monodraught.

The plastic waste problem

Plastics waste is a complex problem, in terms of causes, but also in terms of its effects. The effects are broad and not limited to environmental damage. UNICEF’s Generation Plastic report, explains this problem very well. For example, plastic waste can be a very fertile breeding ground for infectious diseases, for example, but it can also block drainages and thus cause floodings. But environmental damage is still one of its most severe effects, as it’s estimated that 57% of all plastic waste is openly burned. This leads to toxic emissions, which children breathe in.

Clearly, we need to reduce our use of plastics and our reliance on cheap virgin plastics. At the same time, there is also a need for better collection of plastic waste and a greater capacity to recycle it. Norwegian company Tomra plays a key role in enabling this. It invented the reverse vending machine (the machine which collects your empty bottles), but it also sells machines that enable the sorting of plastic waste, which is a necessity for a successful recycling. Given the current low collection and recycling rates and legislation implemented to stimulate the increase of both, we believe the growth prospects for Tomra are very positive.

Diversification

This theme is important from both a child wellbeing perspective and a portfolio construction perspective. Companies that fit the safe and clean environment theme tend to have distinct characteristics from companies that contribute to the other four child wellbeing themes we have identified. Whereas, in general, companies fitting the other themes offer consumer products, the companies in this theme do not. Often, demand for their products is tied to construction markets, making it more cyclical compared to demand for food, health care or childcare services. Lastly, the companies that sell these products have different cost structures, as they rely relatively more on tangible assets. We therefore believe that companies that contribute to this theme enable a better diversification of the fund.

This is a marketing communication. Please refer to the prospectus and the Key Information Document of Triodos Future Generations Fund before making any final investment decisions. An English summary of investor rights can be found here. The value of your investment can fluctuate because of the investment policy. Past performance does not predict future returns. Triodos Future Generations Fund is managed by Triodos Investment Management. Triodos Investment Management holds a license as alternative investment fund manager and UCITS manager and is under the supervision of the Autoriteit Financiële Markten and De Nederlandsche Bank in the Netherlands. Triodos Investment Management may decide to stop the marketing of its collective investment schemes in your country.