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Investing for planetary resilience

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By Amy Clarke, Chief Impact Officer of Tribe Impact Capital

Half of the World Economic Forum’s ‘Top 10 Risks’ for the coming decade are environmental risks[1]. Rather than respecting and operating within nature’s limits, we have been exceeding them and undermining the resilience and regenerative capacity of the Earth system. As a result we’re now faced with the twin crises of anthropogenic climate change[2] and unprecedented biodiversity loss[3].

As a global community, we have an opportunity to build back better. For impact investors, this means directing our capital allocation and stewardship activities towards solutions that can drive systems change and transformation. At Tribe, we focus on many forms of resilience. We divide our range of resilience-based investment opportunities into three categories which are integral to facilitating the systems change we want to see: infrastructural, planetary and human resilience. In this piece, we are going to discuss investment opportunities that support planetary resilience. These investments strengthen natural systems and their ability to function healthily so that planetary boundaries are respected, and the regenerative capacity of nature is supported.

Circularity

The circularity transition will be enabled by increasing modularisation within products, as well as a shift away from asset ownership towards product-as-a-service business models. Circularity requires focusing, wherever possible, on repairing and refurbishing products, reusing and recycling ‘end-of-life’ materials and diverting organic waste from landfill in favour of composting. By reducing demand for virgin materials and returning nutrients to soils, these kinds of circular practices can help natural systems to regenerate and recover from overexploitation and degradation. Circular investment opportunities exist within multiple industries. Some include the reclamation and recycling of plastic, metal, paper and food waste, the production of recycled-content and recyclable materials for use in packaging, construction and textiles, and the provision of refurbishment or repair services.

Pollution prevention and control

Closely related to circularity is the need for all industries to reduce and better manage their waste streams in order to minimise the proliferation of pollutants which contaminate our land, air and water. Not only does toxic pollution undermine the resilience of sensitive marine and terrestrial ecosystems, according to The Lancet, exposure to contaminated air, water and soil resulted in 16% of all global premature deaths in 2015[4]. As investors seeking solutions, we look for companies that offer waste treatment services, environmental remediation and clean-up services and pollution testing services. Other investment opportunities include utilities that provide sewerage services, and pollution control technologies like catalytic converters and scrubber systems which help eliminate harmful air pollution from industrial processes and transportation.

Natural capital preservation

Building on the principles of circularity and pollution control, there is a need for frontline biodiversity protection and stewardship in order for our social-ecological systems (linked systems of humans and nature) to regain their resilience. While investment opportunities are harder to find in this sphere, we look for companies operating at the forefront of sustainable land use. Examples include companies involved in sustainable forestry, natural forest restoration and/or regenerative organic agriculture. These activities help to regenerate degraded land, support biodiversity and draw carbon down into trees and soils. In the interests of ecological resilience, these kinds of activities should be conducted with an understanding of local ecological conditions; they should prioritise sustainable land management practices and should involve a diversity of tree and crop species[5], including those which are adapted to withstand different pests and to tolerate climatic changes like droughts and flooding. In the case of forestry, the end product should be intended to provide long-term carbon sequestration, for example in the construction industry as opposed to the biomass industry.

Clean water provision

Global water resources for drinking and sanitation are increasingly under threat due to over-abstraction, pollution and climatic changes which are exacerbating physical water scarcity[6]. Investing for resilience in this sphere means investing to expand access to safe and affordable water which is sustainably managed and conserved. Investment opportunities include the extension and upgrade of global wastewater treatment and water distribution infrastructure, as well as innovative technologies enabling water reuse and water efficiency.

In addition to sustainable water utilities, technologies like closed-loop water systems for industrial cooling, micro-irrigation technologies to reduce agricultural water use and water-efficient bathroom and kitchen appliances are all investible solutions.

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