Erste Asset Management

The source of life (Editorial)

The source of life (Editorial)
The source of life (Editorial)
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Actually, it should not be “dust to dust”, but “water to water”. The human body consists mainly of water. Without water, there would be no life on Earth. Hardly any other term is linked more directly to the idea of sustainability than water. No wonder, then, that water can be analysed from a multitude of angles.

From an environmental perspective, the crucial issues are the overuse of water and the impact that this consumer behaviour has on the environment. Polluted waters destroy the habitat of man and animal. “Deserted” landscapes, quite literally, are the consequences of excessive water withdrawal and consumption in many regions around the globe. Lake Baikal, the Aral Sea, and Lake Tahoe are on the edge of vanishing, and the Dead Sea is about to deserve its name afresh these days, with the sea level falling by about 70cm every year. Water is also consumed and changed by industrial processes. A few years ago, I saw an exhibition by a photographer, whose work dealt with nuclear power in our midst. One photo showed a fisherman fishing in the shadow of cooling towers. Apparently, fishermen appreciated those areas because the fish were bigger there. The cooling water from the nuclear plant is warmed by a few degrees, which makes the fish grow faster.

Water also has a social dimension. Clean water costs money, at least in many regions of the world. No money tends to mean no or less clean water. Dirty water makes the body sick. In developing countries, diarrhoea is one of the most frequent reasons for child mortality, causing 8% of child deaths. Almost all of them would be avoidable as the comparison with the statistics in Austria shows. The lack of access to clean water is not the least also one of the main reasons why people flee from their home. Where there is no water (anymore), there is no life.

From the perspective of governance, in its broadest sense, water is an issue as well. To whom does it belong? Is it legitimate to privatise water? These are questions of social relevance, which of course also affect companies. How to ensure, in the case of expensive water, that everybody has enough access? How to ensure, for cheap public water, that it is consumed responsibly?

These questions, and as a result the issue of governance, do not stop at the national borders. In his book, Prisoners of Geography, Tim Marshall explains world politics on the basis of ten “national maps”. One map that we will be looking at often in the future is that of the global drainage systems. Water systems do not necessarily conform with national borders. Euphrates and Tigris are the basis of subsistence for Iraq. But their sources are in Turkey, where they are being dammed up and may be diverted in the future. No surprise then, that the UNO expects the fight for water to turn into one of the main reasons for war and thus for social problems and flight in the coming years.

Man is not just a passive observer to all of this. Global trade, to a large extent, is trade in water. The areas with an abundance of water provide for example meat and wheat, both water-intense products, in exchange for labour-intense products that require relatively little water. Therefore, there is Argentinean wheat in Egypt, and Egyptian beans in Austria. But all of this comes with its own share of ESG problems*.

Water is a central ESG topic. In view of the World Water Day on 22 March, we have set ourselves two goals: we want to define the sustainable core issues around water in this ESG letter; and we have established a water footprint for our sustainable equity funds. Knowledge and transparency are the keys to change and improvement. Let’s get started.

*ESG steht für “Environmental, Social and Governance” – zu Deutsch: Umwelt, Soziales und Unternehmensführung. Das sind die drei groben Kategorien, nach denen Unternehmen beim nachhaltigen Investieren geprüft werden.


Mag. Gerold Permoser



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