Resonance Asset Management presents an opportunity for investors seeking stable, long-term returns while making a positive impact through a diversified portfolio.
Climate change adaptation is an essential area of investment that complements mitigation. We are already having to face the reality of a changing environment and insecurity of resource supply. Water is one of these essential resources.
Ignoring the multiplier effect of changing weather patterns on already water-stressed areas will induce a huge cost of inaction, forcing many industries across the world to shut down. Managing water and investing in maintaining its supply is critical for the continued operations of industry. The financial impact of inaction is approximately five times greater than acting now.
There is no viable substitute for water in most industrial processes; it is the most effective solvent, cooler, and cleaning agent, hence large corporates must act. Scarcity is often a local problem that has local solutions.
How We Fight Climate Change
Investors often prioritise renewable energy strategies when seeking climate-positive opportunities. Decarbonisation is crucial for mitigating climate change, but it overlooks the broader need to adapt industries and reduce their overall environmental impact. This includes reducing carbon pollution and managing resource scarcity, improving efficiencies, and waste management processes.
Water Conservation
Carbon Disclosure Project predicts that US$301bn of business value is at risk unless companies improve their water management and solve climate change-accelerated scarcity.
Water systems are experiencing strain; glacier water reserves are declining and rising sea levels will exacerbate the salinisation of groundwater, compounding the issue. Two billion people already do not have access to safe drinking water. Numbers are expected to increase, exacerbated by climate change and changing population demographics.
- Water treatment, reuse, and desalination reduce the pressure on freshwater sources.
- Innovative industrial cooling systems using Zero Liquid Discharge technologies or seawater cooling significantly reduce consumption.
Energy Efficiency
Increased energy efficiency offsets carbon production and reduces costs. Cost savings derive from energy-efficient technologies including:
- Low-energy membrane filtration, optimised pumping systems.
- Reduced energy losses due to less grid transmission.
Onsite production and treatment processes are decarbonised through onsite renewable energy generation resulting in:
- Reduced greenhouse gas emissions through lower carbon production.
- Increased energy independence and predictability of supply.
- Reduced energy losses due to less grid transmission.
Resource Recovery
Co-located industrial water treatment assets can also extract valuable resources from wastewater, such as nutrients, organic matter, and bioenergy.
- Using anaerobic digestion, methane can be captured to generate base load renewable electricity, displacing the need for fossil fuels.
- Municipal wastewater treatment plants have high agronomic effectiveness – phosphorus absorbed by microbial biomass can be recovered and reused in agriculture. Ammonia production is typically energy-intensive; recovery of this resource decarbonises fertiliser production.
- Heat distribution systems save energy.
Pollution Prevention
In the UK, public health and social care costs of air pollution in England could reach £5.3bn by 2035, with costs in 2017 being recorded at £42.88m.
Industrial processes generate wastewater that contains pollutants, such as heavy metals, organic compounds, and nutrients.
- Methane is a far more concentrated gas, with a more harmful effect on the environment.
- Improved air and water quality reduce the impact on public health as well as the environment.
The Investment Opportunity
Resonance is both a financial and technical partner, able to deliver outsourced solutions that address industry’s water, energy, and resource sustainability needs. We connect corporates and specialised technical operators and invest in assets under long-term off-take contracts.
Resonance’s team has over two decades of experience in the industry. We are well-placed to deliver on our core mission: to have a positive impact on the planet by limiting industrial pollution and waste while delivering steady income streams for investors.
The Advantage of Co-located, Sustainable Assets
Co-located infrastructure assets are not typical investments for climate-oriented impact funds, but are essential to mitigating both the rate and the effects of climate change. However, they offer a unique set of advantages making them an attractive option for investors seeking stable, long-term returns while making a positive impact through a diversified portfolio:
- Demand for the ‘primary inputs’ produced by the asset, water and energy, is inelastic.
- Assets are cash generative, providing a predictable and reliable cash flow through long-term off-take contracts with credit-worthy partners.
- Operating costs tend to be low due to proven technology and reliable operating partners.
- Exposure to hard-to-access investments ahead of the crowd.
- Low correlation to typical ESG investments (grid-scale solar/wind) which have single-factor exposure to energy markets and are susceptible to energy market volatility. The strategy offers a unique ESG angle in making existing industry, often overlooked despite its huge environmental impact, more sustainable.
Resonance is a signatory of the UN PRI, and, as per EU’s Sustainable Finance Disclosure Regulation (SFDR), intends to classify this strategy as Article 9 and align the investment strategy with EU Taxonomy objectives.
