Harness growth opportunities whilst safeguarding the environment
Protecting the environment is now a priority for consumers, companies and governments. Their converging interests, driven by increased global awareness, technological advances and health concerns, are underpinning a global drive to safeguard the world’s natural resources.
1 . Consumers’ increasing awareness
North American organic products market US organic food market size (USD bn)
Public opinion is forcing governments and private companies to make large-scale changes to their strategies.
With nearly 50 per cent of the world connected to the internet1, the transmission of thought-provoking information has never been faster or more wide-reaching.
Bearing testimony to this is the global social phenomenon that is “Under the Dome”, a film documenting the scale of China’s urban pollution, which was viewed online 200 million times within days of its release in 2015. Soon after, China pledged to cut its CO2 emissions to between 60–65 per cent of 2005 levels by 20302.
Companies are also responding to consumer demands, and are increasingly factoring in environmental considerations into their thinking. The rising supply of organic produce in agriculture is a prime example of a sector benefiting from a shift in consumer habits.
2 . Private sector innovation
Private companies are seeking to benefit from the shift in consumer focus.
For instance, the development of advanced analytics and services in the waste management and recycling sector is helping alleviate the wasteful use of natural resources.
Meanwhile, innovations such as better fluid dynamics modelling technology have greatly improved the quality and efficiency of water treatment and wastewater reuse technologies. In another example, companies can now analyse minute concentrations of pollutants, such as oestrogen from birth control tablets, in rivers. This can help them understand these chemicals’ effects on fish populations, and as a result bring about positive environmental change.
Between 2000 and 2012, global annual applications for environmental patents more than doubled (see chart). This is indicative of the increased focus private companies are placing on providing innovative solutions to environmental issues.
3 . Government action
Environmental sustainability is also benefiting from governments’ policy changes, such as the recent pledges by China to reduce CO2 emissions. This is in part being driven by new monitoring technologies, which are helping in the production of reports such as The World Health Organization’s Air Quality Index (see below).
Global levels of urban ambient pollution*
*Air quality is represented by annual mean concentration of particulate matter, smaller than 2.5 micrometers, per m3. Reference: World Health Organization, 2016
Recent reports have stated that over 7 million people died prematurely as a result of air pollution in 20123. Such statistics have contributed to the rise of multilateral environmental agreements, of which the cumulative total reached 1,100 by the end of 20124. Companies that recognise and support consumers’ and governments’ environmental shifts are likely to benefit and represent attractive long-term opportunities for investors.
Environmental spending in China: waging a “war on pollution”
Investing for a sustainable future
Environmental issues are now a matter of global importance. Companies that provide effective products and services that increase resource efficiency and minimise pollution are well placed to grow strongly. In our view, by investing in these firms, investors can make a positive contribution towards a more sustainable world, as well as generating attractive capital gains.
Dr Marc-Olivier Buffle, Senior Product Specialist, Pictet-Global Environmental Opportunities Fund
Note: *Landfills are the third-largest man-made source of methane.
 Internet World Stats
 United Nations Framework Convention on Climate Change
 World Health Organization
 International Environmental Agreements Database
Pictet-global environmental opportunities at a glance
• Invests exclusively in companies solving global environmental challenges such as pollution control, water supply, renewable energy, waste management and sustainable agriculture. The fund is also a good option for those who don’t want to invest in sectors such as oil and gas or mining.
• The fund invests in the world’s most environmentally responsible public companies – those with a small environmental footprint and that are building products or services that have a positive impact on the environment.
• We believe the fund could be a good alternative to traditional global equity funds for this portion of an investors’ portfolio and for those who want to benefit the environment whilst investing.