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Investing in food and water climate solutions

We look at 3 fund ideas to help investors take food and water climate solutions into their own hands.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

We all need food and water to survive. But the emissions produced by the food industry are fuelling the ‘global warming fire’ and our freshwater supplies are running out.

Around a third of global greenhouse gas emissions originate from the world’s agricultural and food systems. The main emitters are livestock, widespread fertiliser treatment and intensive machinery use. And with the deforestation of land for agricultural use, the very trees and natural soils that could absorb the greenhouse gases are being destroyed.

As well as emitting the likes of carbon dioxide, methane and nitrous oxide, food production also uses a lot of water. The industry uses around two thirds of global freshwater.

Water is a finite resource, and our supplies are already stressed from the heatwaves and droughts caused by climate change. And some of our remaining freshwater ecosystems are being polluted by the excess fertilisers used in agriculture.

The rapid growth of the world’s population is only putting further strains on food and water demand.

In order to help reduce emissions, protect water security and build a sustainable future, we need to re-shape our agricultural systems. Investing can be a great way to do that.

This article isn’t personal advice and isn’t a recommendation to invest. If you’re not sure if an investment is right for you, ask for financial advice. All investments can fall and rise in value so you could get back less than you invest.

How to take matters into your own hands

Investors have the opportunity to fund innovative climate change solutions.

Themes that investors can look out for include the development of meat and dairy alternatives, food supply chain wastage reduction methods, and water treatment technology. Reducing water and food waste supports what’s known as the circular economy – reducing, recycling, and reusing. This is a way of managing our finite resources.

Investing through funds lets you engage in a range of themes, while diversifying and spreading your risk. Below, we look at three funds that invest in companies helping to solve these, and a range of other environmental and social issues.

These funds invest in quite a niche area of the market, so we expect them to perform differently to other funds in the IA Global sector at times. All these funds have the flexibility to invest in emerging markets, which increases risk.

Investing in funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.

Baillie Gifford Positive Change 

The Baillie Gifford Positive Change fund invests globally in companies that create positive change in one of four areas – social inclusion and education, environment and resource needs, healthcare and quality of life and addressing the needs of the world’s poorest.

Current investments include Beyond Meat, a pioneering plant-based meat alternatives producer which aims to reduce global meat consumption. The company’s encouraging behavioural change by partnering with fast food outlets, like KFC.

Another of the fund’s investments, Deere & Co, develops and manufactures precision agriculture technologies which use cameras and machine learning to differentiate crops and weeds. The sprayer then only applies pesticide to weeds, and fertiliser to crops, significantly reducing waste, and the impact on ecosystems.

Investors should note this fund invests in a relatively small number of companies, which adds risk.

Find out more about Baillie Gifford Positive Change, including charges

Baillie Gifford Positive Change Key Investor Information

FP WHEB Sustainability  

The team behind the FP WHEB Sustainability fund invest based on nine sustainable investment themes. These range from resource efficiency and sustainable transport to education and wellbeing.

The fund currently invests in HelloFresh, a meal kit delivery service that ships weekly boxes of fresh ingredients along with recipes, making high quality food easily available. It does this while creating up to a third less food waste than more traditional food supply models. As the company offers access to healthier eating, this could also help reduce medical conditions like obesity and cardiovascular disease.

Another holding, Koninklijke DSM, develops innovative food and feed supplements for human and animal nutrition. This supports healthy diets, reduces the environmental impacts of food production, and supports more efficient global food supply chains.

This is the only fund managed by the WHEB team, meaning they're totally dedicated to it and solely focused on its success. The fund's focus towards small and medium-sized companies adds risk. 

Find out more about FP WHEB Sustainability, including charges

FP WHEB Sustainability Key Investor Information

JPMorgan Climate Change Solutions 

The managers behind the JPM Climate Change Solutions fund identify long-term megatrends and themes and then invest in companies set to benefit over time. One of the key sub-themes is sustainable food and water.

Two of the fund’s largest investments address global water efficiency. Evoqua Water Technologies develops water and wastewater treatment systems so that water can be reused. This helps reduce the burden on new water supplies.

Xylem Inc supplies digital solutions to water loss in the water cycle. They integrate digital technologies to understand the water footprint across the value chain including the impacts of use, or misuse, of water.

The circular economy is a core value of both these companies.

This fund tends to invest in relatively few companies, which adds risk, as do the fund’s investments in smaller companies.

Find out more about JPMorgan Climate Change Solutions, including charges

JPMorgan Climate Change Solutions Key Investor Information

How can I see the impact of my investments?

Responsible investment funds often release a sustainability or impact report that shows the influence their portfolio has had across society and on the environment. You can find these on the fund group’s website.

Want to learn more?

If you want to learn more about investing responsibly, have a look at the Responsible Investment section of our website. It’s got everything from tips and tricks to help you get started investing responsibly to fund ideas.

Learn more

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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