Positive screens are powerful filtering tools with which to identify companies which are ticking certain investment boxes. One box we are often asked about is companies which are taking action to clean our oceans. Given the extent of the environmental challenges facing our oceans, many investors are interested in which corporates are making a difference. The good news is there are companies within the S&P 500 who are helping in this area. Read on to discover who’s doing the good work.
By way of background, the S&P 500, or simply the S&P, is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States. It’s one of the most commonly followed equity indices. The companies in the index are currently worth over $33 Trillion dollars.
Why cleaning the ocean is such a significant issue
According to Conservation International, eight million metric tonnes of plastic is dumped in the oceans each year. At that rate, by 2050 the plastic in the oceans will outweigh all the fish. If that isn’t shocking enough, it’s what the plastic does to life in the ocean, and ultimately to humans which is of most concern. Huge numbers of ocean dwellers die each year due to plastic inhalation. And plastic is now finding its way into the human food chain because so many sea creatures are eating it. Plastic pollution is a serious issue, and is one of many challenges facing our oceans.
Who’s helping clean our oceans?
Our positive screening has identified four companies below who are helping to clean our oceans.
American Water Works Company
- Sector: Public Utilities
- Market Cap: $27B
- % of S&P500: 0.1%
- Clean Oceans Contribution: Water and Wastewater Systems
American Water Works Company is a waste and wastewater services group which is in the Clean Ocean Index due to its Water Treatment activities. Whilst the company is involved in extensive activities to protect all water resources, it’s particularly focused on community partnerships to protect watersheds (land areas draining streams and rainfall to a reservoir or mouth of a bay). This serves the dual purpose of protecting the company’s water supply whilst reducing the risk of ocean contamination.
- Sector: Industrials
- Market Cap: $10B
- % of S&P500: 0.03%
- Clean Oceans Contribution: Water Efficiency and Treatment
Pentair is a water efficiency and treatment group which is in the Clean Ocean Index due to its Water Treatment activities. The company has extensive ESG policies focused on protecting all water resources. And recently, Pentair acquired Rocean, a technology leader in sustainable water solutions. Rocean’s smart filtration devices reduce the usage of single use plastic bottles, keeping them out of our oceans.
- Sector: Indsutrials
- Market Cap: $19B
- % of S&P500: 0.06%
- Clean Oceans Contribution: Water Technologies
Xylem is a water technologies group which is in the Clean Ocean Index due to its Water Treatment activities. Xylem addresses major water challenges all around the world, and is focused upon de-risking the future. For example, Xylem provides ocean and coastal monitoring services aimed at identifying risks so they can be addressed ahead of time.
IDEX Corporation (IEX)
- Sector: Financials
- Market Cap: $16B
- % of S&P500: 0.56%
- Clean Oceans Contribution: Water, pumps, flow meters, fluid system
IDEX is a manufacturer of water pumps, flow meters and fluid systems which is in the Clean Ocean Index due to its Water Treatment activities. The company’s Fluid and Metering Technologies division is involved in waste and wastewater management, often with the objective of reducing runoff into the oceans and reducing environmental risks.
As ESG issues are increasingly correlating with financial performance, more investors are on the lookout for companies which are scoring highly on ESG issues. Given the extent of the challenges facing our oceans, cleaning the oceans is a significant opportunity. The four companies mentioned above are well positioned to take advantage of this ESG opportunity.