Water stress and scarcity affect many parts of the world and the problems are likely to become more acute in coming years. Given the increasing attention on these challenges, investors have begun to allocate capital to water-related assets. However, investments are still limited and often made indiscriminately, resulting in underexposure to equities with more attractive risk/return profiles.
We believe asset owners can help solve the world’s water challenges while earning positive financial returns—the key is to be selective. We think a disciplined, valuation-aware approach that encompasses a holistic view of water assets and related ecosystems, including energy companies in some cases, can deliver alpha in this space.
All investments are subject to risk, including the possible loss of principal. Risks of focusing on investments that involve sustainability and environmentally responsible investment criteria may influence investment performance to increased risks related to downturns or other adverse developments in that market segment.