Global Investing

There’s cash in that trash.

Analysts at Bank of America/Merrill Lynch are expounding opportunities to profit from the burgeoning waste disposal industry, which it estimates at $1 trillion at present but says could double within the next decade. They have compiled a list of more than 80 companies which may benefit most from the push for recycling waste, generating energy from biomass and building facilities to process or reduce waste. It’s an industry that is likely to grow exponentially as incomes rise, especially in emerging economies, BofA/ML says in a note:

We believe that the global dynamics of waste volumes mean that waste management offers numerous opportunities for those with exposure to the value chain. We see opportunities across waste management, industrial treatment, waste-to-energy, wastewater & sewage,…recycling, and sustainable packaging among other areas.

There is no denying there is a problem. Around 11.2 billion tonnes of solid waste are produced by the world’s six billion people every day and 70 percent of this goes to landfill. In some emerging economies, over 90 percent is landfilled.  And the waste mountain is growing. By 2050, the earth’s population will reach 9 billion, while global per capita GDP is projected to quadruple. So waste production will double by 2025 and again from 2025 to 2050, United Nations agencies estimate.

And in emerging markets, challenges and opportunities are both enormous, BofA/ML says. Just Brazil for instance needs investments of $180 billion in this sector. For one, recycling is less widespread. Second, as countries grow richer they produce more rubbish. Third, all big emerging countries have multi-billion dollar plans to improve waste disposal.

Lets look at some of the opportunities BofA/ML has identified:

– Disposal and recycling of municipal solid waste (rubbish, in common parlance) is currently worth $400 billion but over the next decade,  $87 billion in investments are expected in this sector.

Emerging markets may not be the obvious destination for your ethical investment. Rapidly expanding economies are consuming a lot of energy, pumping CO2 in return. Many of these markets suffer from legal and political problems that keep investors on their guard.  BRIC legal systems have room for development.  Their financial disclosure is still patchy. 

However, BNP Paribas sees opportunities as it believes fast growth in these markets and increased inflows would create the need for a socially sustainable environment for investment.

“Our analysis has unearthed a number of particularly promising sustainable investment strategies in emerging markets. In each of these cases we see a real economic need linked to maintaining high growth rates, but also evidence that policymakers are recognising this need and are putting in place the necessary policy measures to facilitate this development,” the French bank said in its latest Sustainable and Responsible Investment (SRI) newsletter.

A growing number of Investors, including state-owned funds, are looking to invest in water to benefit from efforts to tackle climate change.

According to multi-asset manager Armstrong Investment Managers, less than 0.01 percent of water is easily accessible freshwater and global water use has tripled since 1950 — increasing faster than the world’s population.

“Demographic and climate changes will lead to two thirds of the population inhabiting areas with scarce water,” the firm says.

It’s nickel and dime time for banks as they come under pressure to cut costs in order to survive the worst financial crisis in 80 years.

According to banking sources, a U.S. bank in Canary Wharf has banned colour printing and has asked employees in the back office to chip in 25 pounds each for the office Christmas party.

A bank in Mayfair has told its employees to only hail cabs on the street instead of booking on the phone. Another bank in the City has pushed back the time employees can take taxis home to 9.30pm from 8.30pm previously.

British water companies announced a plan earlier this week to
increase household water bills by up to 4.5 percent above
inflation between 2010 and 2015.

A pain for households, yes. But such increases underline a trend
that may prove tempting to investors searching for new commodity
assets as oil, gold etc tumble from their peaks.

The water index on the International Securities Exchange, which
includes companies engaged in water distribution, water
filtration, flow technology and other water solutions, has risen
more than 5 percent since January.