Erste Asset Management Investment Blog

The source of life (Editorial)

The source of life (Editorial)
The source of life (Editorial)
Share post:

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

DOSSIER

RESPOND TO THE ARTICLE

Legal disclaimer

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH. The language of communication of the sales offices is German and the languages of communication of the Management Company also include English.

The prospectus for UCITS funds (including any amendments) is prepared and published in accordance with the provisions of the InvFG 2011 as amended. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in conjunction with the InvFG 2011.

The currently valid versions of the prospectus, the Information for Investors pursuant to § 21 AIFMG, and the key information document can be found on the website www.erste-am.com under “Mandatory publications” and can be obtained free of charge by interested investors at the offices of the Management Company and at the offices of the depositary bank. The exact date of the most recent publication of the prospectus, the languages in which the key information document is available, and any other locations where the documents can be obtained are indicated on the website www.erste-am.com. A summary of the investor rights is available in German and English on the website www.erste-am.com/investor-rights and can also be obtained from the Management Company.

The Management Company can decide to suspend the provisions it has taken for the sale of unit certificates in other countries in accordance with the regulatory requirements.

Note: You are about to purchase a product that may be difficult to understand. We recommend that you read the indicated fund documents before making an investment decision. In addition to the locations listed above, you can obtain these documents free of charge at the offices of the referring Sparkassen bank and the offices of Erste Bank der oesterreichischen Sparkassen AG. You can also access these documents electronically at www.erste-am.com.

N.B.: The performance scenarios listed in the key information document are based on a calculation method that is specified in an EU regulation. The future market development cannot be accurately predicted. The depicted performance scenarios merely present potential earnings, but are based on the earnings in the recent past. The actual earnings may be lower than indicated. Our analyses and conclusions are general in nature and do not take into account the individual characteristics of our investors in terms of earnings, taxation, experience and knowledge, investment objective, financial position, capacity for loss, and risk tolerance.

Please note: Past performance is not a reliable indicator of the future performance of a fund. Investments in securities entail risks in addition to the opportunities presented here. The value of units and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your units. Persons who are interested in purchasing units in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is different than the investor’s home currency, changes in the relevant exchange rate can positively or negatively influence the value of the investment and the amount of the costs associated with the fund in the home currency.

We are not permitted to directly or indirectly offer, sell, transfer, or deliver this financial product to natural or legal persons whose place of residence or domicile is located in a country where this is legally prohibited. In this case, we may not provide any product information, either.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of the fund to American or Russian citizens.

It is expressly noted that this communication does not provide any investment recommendations, but only expresses our current market assessment. Thus, this communication is not a substitute for investment advice, does not take into account the legal regulations aimed at promoting the independence of financial analyses, and is not subject to a prohibition on trading following the distribution of financial analyses.

This document does not represent a sales activity of the Management Company and therefore may not be construed as an offer for the purchase or sale of financial or investment instruments.

Erste Asset Management GmbH is affiliated with the referring Sparkassen banks and Erste Bank.

Please also read the “Information about us and our securities services” published by your bank.

Subject to misprints and errors.