Water - the blue gold

Not turning off the tap when brushing your teeth can quickly waste around 15 litres of water. That's five litres more than many people in developing countries have per day.^[1] Often we don’t appreciate that abundant clean water is a luxury. 

Since water is essential for everyone’s survival but is shared very unequally around the world, the United Nations declared access to it as a human right in 2010.^[2]

According to current estimates, 7.8 billion people live on earth^[3], and based on the United Nations World Water Report 2020, more than 55 percent lack safe sanitation and around 28 percent do not have access to safe drinking water.^[4] This problem is likely to worsen given that the world's population could grow to around 11 billion by 2100.^[5]

Freshwater supplies are already limited, because although three-quarters of the earth is covered with water, freshwater accounts for only about 2.5 percent of the so-called global water budget.^[6] At the same time, water consumption worldwide has been rising by about one percent per year since the 1980s.^[7] As this increase is expected to continue at a similar rate over the next three decades, freshwater supplies are likely to come under increasing pressure.

In addition to population growth and increased urbanisation, changing middle-class lifestyles are also responsible. Rising consumption of dairy and meat products brings with it increased demand for water for agriculture.^[8]

Freshwater consumption per sector^[9]

Less than ten percent of the world's water is consumed by private households or at the municipal level. Agriculture, energy production and mining are the largest consumers of water.^[10]

Climate change has consequences for the water supply of the environment and people. The Intergovernmental Panel on Climate Change (IPCC) expects global warming to worsen heat waves and droughts in many regions of the world.^[11] Through melting glaciers, rising sea levels, heavy rainfall and flooding, climate change is already visible in many areas.^[12]

Water scarcity is, without question, one of humanity’s greatest social challenges. Substantial investments are likely needed to tackle it. To alleviate the risks, the World Water Report calls for two complementary strategies to be implemented: "On the one hand, adapting water use to climate change, and on the other, climate protection through sustainable water management."^[13]

According to the United Nations, annual spending would need to triple to as much as $114 billion in the coming decade.^[14] Only then will the goals set for 2030 - safe and affordable drinking water as well as adequate sanitation and hygiene for all people - be achievable.^[15] However, most governments cannot raise these large sums on their own. Private companies also need to be involved.

DWS analysis shows that companies with high water risk are typically found in the energy, building materials, food and beverage, and independent power producer sectors. Companies with low water risk are usually in financial, healthcare and communication services, and traffic and transportation. Water risks could provide opportunities in industrial gases, construction markets and materials, speciality chemicals, and renewable energy.

The potential water risk and opportunities may be a consideration with portfolio allocations.

„Companies that cover the entire value chain around water appear particularly promising.“

Paul Buchwitz, Fundmanager of DWS SDG Global Equities.

DWS & Healthy Seas - protecting the oceans and their creatures

DWS is increasing its commitment to protecting the oceans. Since last year, we have been supporting Healthy Seas, an organisation dedicated to ridding the world's oceans of discarded fishing nets and other marine litter, thereby saving the lives of countless sea creatures. Healthy Seas has made a huge impact by conducting numerous recovery missions in a wide variety of waters. To ensure that the hunt for discarded fishing nets and other marine litter can continue, DWS has donated funds that have made it possible for Healthy Seas to purchase its first own dedicated boat. This has made Healthy Seas more flexible and independent, enabling it to increase significantly the number of salvage missions in the future. Raising public awareness about the deadly problem of lost or intentionally discarded ocean fishing nets is another part of the organisation’s important mission, which DWS is proud to support.

Saving marine life from ghostnets