Capitalising on the longevity economy Investment Conference 2019 - PowerPoint PPT Presentation

Capitalising on the longevity economy Investment Conference 2019

Megatrends: urbanisation and waste management Bertrand Lecourt Portfolio Manager Fidelity International

Did you know? Water: it’s more than drinking and washing How much water in… Food 1 2 3 4 5 6 1 egg 1 kg 1 kg 250 ml Slice of Cup of coffee meat cheese beer bread 200 15,500 5,000 75 40 140 Water use example: Emerging market, Brazilian consumer average 5,600 litres of water a day per person Source: Fidelity International, 30 September 2018. Waterfootprint.org. Check your own water footprint: http://waterfootprint.org/en/resources/interactive-tools/personal-water-footprint-calculator/ https://www.watercalculator.org/wfc2/complete/

Did you know? Water: it’s more than drinking and washing How much water in… Clothes Accessories 7 8 9 4 5 6 1 pair of Jeans 1 cotton Computer 1 piece of Car shoes t-shirt paper A4 8,000 1,900 2,700 31,500 10 144,300 Water use example: Emerging market, Brazilian consumer average 5,600 litres of water a day per person Source: Fidelity International, 30 September 2018. Waterfootprint.org. Check your own water footprint: http://waterfootprint.org/en/resources/interactive-tools/personal-water-footprint-calculator/ https://www.watercalculator.org/wfc2/complete/

“ The story of water and waste is the story of people. There is no economy without water, no sustainable economy without waste management .” Source: Fidelity International, 30 September 2018.

The planet needs water and waste management…always will Waste and water needs are growing faster than global GDP Megatrend Long-term drivers Common grounds c.70% of World population expected to live in Cities by 2050 1 Clean water & sanitation needs Need to manage waste More people living in cities Water Mega trend since Increasing middle class consumption in emerging markets the dawn of civilisation Higher wealth & consumption Water intensive goods More waste generated Sustained growth Ageing infrastructure in the western world / new projects in emerging markets More infrastructure pressure Network repairs and new build Investment in waste solutions Waste High standards of healthcare regulation create added value for new services and technologies Regulation & health needs Outsourcing and new markets Outsourcing and new markets The other side of wealth creation New source of Fresh water is becoming scarce and waste becomes a resource growth Resource & scarcity New technologies and solutions Use waste as resource Source: Fidelity International. 1 United Nations, Department of Economic and Social Affairs, May 2018.

Example of regulation: ballast water treatment The introduction of foreign species is considered to be one of Global ballast water treatment systems (BWTS) market the five major threats to aquatic biodiversity 150 100 50 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Container Ships Dry Bulk Carriers Tankers General Cargos Source: IMO, https://www.hexaresearch.com, August 2018

Water gap is increasing - driven by a growing need for food, goods, energy and health Aggregated global water gap by 2030, billion m 3 Water use increases with population 1000% 900 Percent growth from 1900 baseline Water Withdrawals (projected) WATER 900% 2% CAGR ~40% Water Consumption (projected) 2800 GAP 800% 1500 Population (projected) 4200 700% 100 Municipal & 600 Ground 700 600% domestic water 800 industry More 500% Relevant supply volume 400% 4500 quantity is much lower 3100 then the absolute Surface 300% Agriculture renewably water water 200% 3500 availability in nature 100% Existing 2030 Basins with Basins with Existing 0% withdrawls withdrawls deficits surplus accessible, 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2025 reliable, sustainable supply Source: McKinsey & Company, Water 2030 Global Water Supply and Demand model; agricultural production based on IFPRI impact-water base case. Existing Source: Fidelity International, Shikomanov 1999, US Census bureau 2011. withdrawals based on 2010 agricultural production analyses from IFPRI.

Room for global water prices to grow - water prices offer significant upside in developing countries Integrated water tariff ($/m 3 ) vs GDP/head ($) vs population size (bubble) $100,000 United States Switzerland GDP/Head Log Scale Singapore ($ 2015) Denmark Australia Netherlands Sweden Canada Japan Korea, Rep. UK Belgium New Zealand Germany France Spain Italy Portugal Argentina Chile Turkey $10,000 Poland Russia Brazil Mexico China Tunisia More Philippines Price Upside Average price (drinking + w aste water) India Drinking & Waste Water ($/m3) $1,000 $-1.00 $- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 Source: Fidelity International, Global Water Intelligence 2015 Survey.

Investing in the water value chain Focus on all industries exposed to the water cycle Intake Treatment/ Storage Transport/ Supply Municipal/ Release purification distribution domestic use (Pumping, (chemical, (dams, (network) (metering, ~10% Waste water billing, etc…) valves, filters, lakes, treatment & desal, etc…) bacterial, reservoirs, recycling etc…) water Bottling, towers, drinking market etc…) Energy, power, industrial, commercial Raw water Water (incl. oil & gas, mining & other) source release ~20% Rivers, Rivers, lakes, sea, Irrigation/agriculture/farming sea, lakes, etc… aquifer ~70% sources, etc.. Water quality, tests, metering Plant design, municipal & industrial planning, engineering, water related services Source: Fidelity International.

Waste market to double in the next 10 years. The next green gold - inflection point with significant global growth Past and projected global waste generation Projected waste generation by region (SSP2, business as usual) 12 3 (millions of tons per day) 10 (millions of tons per day) Waste generation 2 Waste generation 8 1 6 4 0 2010 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 2 Sub-Saharan Africa East Asia Pacific 0 Europe & Central Asia South Asia 1900 1925 1950 2000 2025 2050 2100 Latin America & Caribbean Middle East & North Africa SSP1 SSP2 SSP3 High Income & OECD countries ▪ Three projections to 2100 for waste generation spell very different futures. In the first Shared Socioeconomic Pathway scenario (SSP1), the 7 bn. population is 90% urbanised, development goals are achieved, fossil-fuel consumption is reduced and populations are more environmentally conscious. SSP2 is the ‘business as usual forecast’, with an estimated population of 9.5bn and 80% urban. ▪ In SSP3, 70% of the world's 13.5bn live in cities and there are pockets of extreme poverty and moderate wealth, and many countries with rapidly growing populations. ▪ Source: Fidelity International, ISWA: The International Solid Waste Association. October 2013.

Waste generation increases with wealth ‘Waste side story - the other side of consumption Municipal waste in kg/head/year vs GDP/head ($) vs population size (bubble) 100000 Sw itzerland Norw ay GDP/head Log Scale Australia United States UK Sw eden Denmark Germany Netherlands Iceland Singapore Finland Canada Austria Hong Kong SAR, China Japan France Belgium New Zealand Italy Korea, Rep. Spain Cyprus Slovenia Czech Republic Estonia Portugal Slovak Republic Greece Lithuania Chile Latvia Hungary Croatia 10000 Poland Russia Brazil Mexico China Turkey Romania Peru Thailand Algeria Tunisia Morocco More waste India volume Waste kg/head/year 1000 -200 0 200 400 600 800 1000 1200 Source: Fidelity International, OECD, 2015.

Plastic: a good example of the waste market Global plastic production by industry Cumulative plastic waste generation and disposal (in millions of tons) (in millions of tons) Total 25,000 448 million tons produced in 2015 Tomorrow The first plastics made from fossil Other 400 fuels are just over a century old. They (2050) 52 million came into widespread use after World includes health care and agriculture 2008 recession 20,000 War II and are found today in 5 years ◄ the average time plastics are used before they’re discarded everything from cars to medical Building and construction devices to food packaging. Their 72 million 300 useful lifetime varies. Once disposed 35 years Primary waste generated 15,000 Industrial machinery of, they break down into smaller 3 million All waste discarded fragments that linger for centuries. 20 years All waste incinerated Transportation 30 million All waste recycled 10,000 200 13 years Electrical 19 million Today 8 years Textiles 5,000 65 million 100 1973 oil crisis 5 years Consumer products 46 million 3 years 0 Packaging 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 161 million Less than six months 1950 1960 1970 1980 1990 2000 2010 2015 Source: National Geographic, June 2018.