Sustainable Investment Awards 2022

Thought leadership paper on sustainable investing, Europe: Morgan Stanley

Focusing on the increasing pressure climate change will have on water need and availability, Morgan Stanley Research’s Changing Tides: Investing for Future Water Access looks at the interconnectedness of water, food and climate as three sustainability challenges.

The paper argues that water is potentially the most complex and costly of the three to solve as it is finite, difficult to transport and under-priced compared with the cost of its provision.

Water use is set to increase by approximately 30% by 2050, mostly driven by agriculture which accounts for 70% of total demand, while at the same time climate change will alter the hydrological cycle, resulting in greater risk of floods in some areas and drought in others. This in turn will present new pressures for crop production, argues the paper.

It is the third paper in a series by Morgan Stanley looking at water, climate and food. It offers five potential solutions for improving access to clean water: desalination; crop science; ‘smart irrigation’; metering & digital solutions; and vertical farming.

 “A major trend with a global impact is water inequality - a quarter of the planet lacks access to safe drinking water, nearly half to safe sanitation. Our report explores how this theme will develop over the coming decades, and outlines the implications for investors globally,” said Jessica Alsford, chief sustainability officer at Morgan Stanley. 

“A very interesting [look at] the interconnectedness of three sustainability challenges,” commented one Environmental Finance Awards judge. “It [is] clear that it is necessary to face up to the problem using a 360° view to find the right long-term solution.”