Climate change: a threat to us all, but also an opportunity
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Climate change: a threat to us all, but also an opportunity

The effects of climate change are not just “on the way” – we’re already seeing them. Flooding, droughts, and rising temperatures are all examples of phenomena directly caused by the emission of greenhouse gases, and they are just the beginning. On our current trajectory, the world will heat to dangerous levels in a matter of decades, leading to widespread crop-failure, rising deaths from overheating, and a fatal water shortage. This is, of course, deeply worrying news.

However, a collection of companies are trying to innovate our way out of danger, and for these companies, climate change is also an opportunity. Chief amongst them is Dominion holding Xylem Inc., one of the world’s premier water technology companies.

Xylem’s share price has risen by 34% so far this year

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SOURCE: Yahoo Finance

The American Water Works Association, in its “2017 State of the Water Industry” report, has pinpointed one of the areas most immediately, and most crucially, under threat from climate change: utilities companies. The report reads:

“Forty-five percent of utility personnel reported their utilities do not include any potential impacts from climate variability in their risk management or planning processes, down from 51% in 2016. Forty-one percent responded that planning at their utilities includes climate change effects while 14% indicated their utility is in the process of including climate change in their planning processes.”

Of course, water infrastructure will be heavily impacted by a number of problems caused by climate change: evaporation rates, extreme weather events, changing precipitation patterns, coastal flooding, and rising temperatures and sea levels.

Xylem is, perhaps, the best placed company in the world to deal with these problems. The company routinely works with similar scenarios – for example, in the fallout from recent natural disasters, Xylem has been amongst the first responders to offer its services. These have been charitable missions, but Xylem’s business includes a wide variety of other examples, such the installation of water reuse technology to help Los Angeles combat drought.

Holding Xylem in your portfolio could let you make a profit from climate change, as the company’s is well positioned to work with utilities to make the necessary amends. And, of course, if Xylem is successful in its mission, we have grounds to hope that the potential human cost of climate change may be greatly diminished. And that’s good news for everyone – investors or otherwise!

Disclosure

Dominion holds Xylem Inc. in its Global Trends Managed Fund.  


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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.