• 23 nov 2017
  • Blog
  • Assetmanagement

Engaged on every water front

Investments in solutions to water scarcity can be made worldwide, far away, and close to home, says Piet Klop.
Piet Klop 480X480 Pggm

Piet Klop

Head of Responsible Investment

I travelled to Delhi because we finally had the opportunity to talk with the chairman of the board of India’s largest producer of electricity, NTPC, about increasing water scarcity threatening to shut down power plants . The meeting didn’t happen as the very night before an NTPC power plant exploded (with 35 fatalities), and Mr Singh obviously had more pressing concerns.

Meanwhile it felt as if the apocalypse had arrived - the smog literally took your breath away and visibility was virtually zero. The air quality in Delhi was 30 (!) times worse than the levels permitted by the World Health Organization (WHO).

Compared with industrial and air pollution calamities, water scarcity may seem less acute, but is no less important to the economy or our investments in India. This also became clear a few days later at the launch of the annual CDP water report in Mumbai.

A greater number of businesses are reporting that their continuity and profitability are endangered by increasing competition between citizens, farmers, and businesses for ever-decreasing water stocks. That is true for NTPC too which partly in response to our earlier engagement has adopted a water policy to mitigate its exposure to water risks.

On behalf of pension fund PFZW, PGGM approaches water scarcity from two sides. From the risk side, by engaging with companies that are strongly dependent on water, and from the opportunity side, by investing in businesses that provide solutions. Via CDP, a non-profit platform for environmental data , we are pushing for more comparable ‘value at water risk’ reports by businesses in which we invest. At selected companies we are also advocating concrete measures for reducing fresh water consumption, for example by cooling power plants with waste water.

On the opportunity side, we are investing in solutions for greater water security. The good news is that technical - often circular – technologies for reducing water consumption and water contamination do exist, as was apparent at the Watertech trade fair in Amsterdam at the end of October. However, the opportunities for investing in water infrastructure and technology are still limited. Also in Amsterdam, Prime Minister Mark Rutte, in his capacity as a member of the UN High Level Panel on Water, called for the price of water amenities to be brought more in line with the value of water.

I had the honour of chairing a session on attracting ‘big money’ for ‘big water’. This is about developing ‘bankable’ projects in which development banks, for example, have a key role to play. A highly promising variation on the popular green bonds are blue bonds, of the kind that are being issued by municipalities, utilities and water boards.

PGGM regularly participates in such discussions , as we are looking hard for investment opportunities on behalf of PFZW, preferably with the renowned Dutch water sector. It is for that reason that the second edition of the Impact Investment Initiative on 23 January 2018 will be dedicated to water. PGGM will bring the Dutch pensions sector and the Dutch water sector together to get acquainted, to share experience and expertise, and eventually to collaborate in the developing of investible opportunities in delta and water technologies and infrastructure. A market worth around 250 billion euros in 2017, and growing at a rate of five to ten percent a year.

That market does not just concern developing countries but also, for example, the restoration and maintenance of leaking water supply pipelines in London or Rome, water purification in China, extracting biogas from waste water, and all kinds of measuring and regulating systems for using water efficiently, protecting delta regions, and storing excess water. Knowledge and capital can help solve water problems all over the world.

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