Dubai: In an evolving world where the notion of sustainability is becoming the catalyst behind every micro and macro decision, it's important to discuss ways to include eco- friendly approaches to one’s investment portfolio.
Investment has become a common activity in our society; it is not tied anymore to a certain age or background. Anyone with interest and knowledge about a specific thing can successfully invest in it, such as real estate, gold, cryptocurrency and more. Investors can tailor strategies to their goals and risk tolerance. Technological advancements and global connectivity have democratised access, empowering individuals to build wealth and achieve financial independence.
However, the focus here is on a certain type of investment, namely regeneration or regenerative investment.
Helping the planet through investing right
A common question would be how is a regeneration approach different from a sustainable one? Gen Y and Z are looking at the sustainable initiative as it strives to do less harm to the planet. However, that's a relatively passive approach.
Regenerative investment focuses not only on driving financial returns but also on creating what is good for the environment and society, stepping into this field requires a well thought-through strategic approach, explained Javier Herrera, partner, and Martin Pavlica, principal, at the Transactions and Transformations Practice of the global consulting firm, Kearney Middle East and Africa, to Gulf News.
Herrera described that even though anyone can step into the field of investment, the definition and desired outcome will differ among investors. “Target return versus risk appetite, environmental impact, societal impact” will vary. “The next step is to identify suitable investment opportunities with the highest potential to achieve the desired objectives or outcomes. As regenerative investment thrives at the intersection of social and environmental challenges, these typically are in areas such as clean energy, sustainable agriculture, or community development – all these sectors offer potential to drive significant positive change,” said Herrera, exclusively to Gulf News.
Regeneration goes beyond sustainability, it strives to do good towards society and the planet, according to a report by the World Economic Forum (WEF). A survey conducted in 2019 by ReGenFriends- a customer-centric, diverse, and inclusive global platform for businesses, organisations, and customers to come together and promote regenerative business practices - showed nearly 80 per cent of US consumers prefer regenerative brands to sustainable brands, according to the WEF report.
Visionary food companies, such as Danone, are moving towards a regenerative approach when it comes to agriculture. They are doing it not only because it drastically reduces water use and emissions, boosts soil fertility and improves animal welfare but also because it enhances the livelihoods of financially challenged farmers, according to the WEF report.
Regeneration investment can also be applied on a micro level. The common investment portfolio will include trading in gold, currency pairs, cryptocurrency and so on. The notion of investing in a regenerative mindset is still new on an individual level.
Invest in water for wealth and social betterment
Have you ever considered adding a natural staple resource such as water to your investment portfolio, making it a more diverse and regenerative one?
Water, often referred to as 'blue gold', has been gaining attention in investment circles as a valuable addition to investment portfolios. With water becoming globally scarce, making it an increasingly pressing issue, investing in water-related assets presents not only a lucrative opportunity but also a socially responsible one.
“While gold is considered a haven and protection against inflation, water is, in our opinion, the new gold. The demand for precious but scarce resources can only rise, even during economic downturns amid a rising global population,” said the chairman of Tsangs Group, Patrick Tsangs, to Gulf News, when asked about the benefits of adding water to one’s investment portfolio.
Tsangs Group is an innovation-focused group with a mission to create a positive impact and to sit at the forefront of the trends that will drive humanity forward through its various investments and activities in sectors such as renewables, biotech and life sciences, artificial intelligence, robotics, mobility, software, gaming, and entertainment tech.
“The ideal green portfolio invests worldwide in companies that contribute to the sustainable use of water. It covers topics of supply and disposal as well as water-related technologies and services. This shall map the entire value chain. Such a fund would have the best conditions to tap the potential of the water growth segment and at the same time contribute to the sustainable use of water as a resource,” said Tsangs.
Additionally, investing in water aligns with environmental, social, and governance (ESG) principles, which have become increasingly important to investors, aligning with regenerative investment fundamental elements.
Here are a few steps to be taken and examined to start regeneratively investing in water.
Step 1: Education
Firstly, educate yourself by reading books like 'The Big Thirst' by Charles Fishman or 'Blue Mind' by Wallace J. Nichols. Look for articles on regenerative agriculture, water conservation, and sustainable investments. As well as enrolling in online courses through platforms such as Coursera, edX, or Udemy that offer courses on sustainable investing and water management.
You need to start with sustainable practices and the circular economy and find opportunities that align with your values, like clean energy or sustainable farming. Focus on companies and funds committed to regenerative practices, said Zina Ashour, founder of Women in Crypto Arabia, to Gulf News, when asked about how to get started and what to look for when it comes to regeneration investment.
“You can invest in public companies, private funds, real assets, private debt, or alternatives like Community Development Financial Institutions (CDFIs). Blockchain technology can help ensure transparency and accountability in these investments,” said Ashour.
Step 2: Identify desired areas of investment
Secondly, identify key areas of investment such as water infrastructure, which includes investments in water-efficient infrastructure such as smart irrigation systems, water recycling plants, and leak detection technologies. Water rights and conservation, which includes purchasing water rights and ensuring they are used for conservation and sustainable practices. Clean water technologies, which includes supporting companies that develop technologies for water purification, desalination, and wastewater treatment. Regenerative agriculture, which includes investing in farms and agricultural practices that improve soil health and water retention.
While gold is considered a haven and protection against inflation, water is, in our opinion, the new gold. The demand for precious but scarce resources can only rise, even during economic downturns amid a rising global population
Step 3: Research
Thirdly, research potential investments. If your commodity of choice is water then look for companies involved in water technology, such as Xylem Inc., American Water Works, and Pentair.
Ashour talked about how blockchain is a key platform, especially for decentralised green bonds that provide transparency and global participation. “The Regen Network is another example, focusing on soil health and incentivising farmers to adopt regenerative practices. Important sectors include renewable energy, agriculture, and community development, all contributing to a sustainable and balanced future,” she said to Gulf News.
Vijay Valecha, chief investment officer of UAE-based financial services firm, Century Financial, spoke to Gulf News, giving insights into platforms to access to establish a regenerative investment portfolio. “UK-based Credit Nature provides products and services that allow investors to connect with landowners to invest in nature-positive projects, including restoration and rewilding.
"The Ethic Hub Platform offers a unique opportunity for investors to make a social impact by supporting the productivity of small farmers. The platform facilitates direct connections between lenders and farmers, enabling the latter to secure funds for crop growth and direct market sales."
Explore venture capital or private equity funds focused on innovation. Firms like S2G Ventures and Anterra Capital focus on sustainable agriculture and water solutions.
Funds like the Global Environment Fund and the Sustainable Water Impact Fund specialise in investments that offer environmental and social benefits along with financial returns.
Step 4: Invest
Fourthly, make the investment happen. If investing in publicly traded companies, open a brokerage account with a verified firm.
If opting for impact funds, reach out to the fund managers or investment advisors to understand the investment process.
For private investments, you need to engage with venture capital firms or directly with startups.
Step 5: Monitor performance
Fifthly, monitor the performance of your investments regularly. Keep an eye on financial performance as well as the regenerative impact and engage with companies and fund managers through asking about their water sustainability practices.
Step 6: Reinvest
And lastly, to stay in the regenerative investment loop and maximise your revenue, you should reinvest profits into further regenerative water projects or other sustainable investments.
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