Adapt or die.
This is the choice facing anyone with money in the market today.
It could be the difference between making a fortune or losing one.
Adapt your investment thinking or risk seeing your investment returns die.
Coronavirus hasn’t only transformed the world we live in; it has also accelerated a revolution that was already gathering pace in the financial world.
ESG stands for Environmental, Social, and Governance and this sector is booming.
ESG investing is geared for the long-term. It balances a company’s sustainability and social impact against traditional metrics of value, quality, and growth.
It is an ideal investing strategy for ordinary investors to commit to.
You see, ESG investing is one of the few techniques out there where the deck isn’t automatically stacked against you.
There are no hyper-fast machines scalping trades, draining every last bit of value.
No, instead there is just good old-fashioned research, an eye for a bargain and getting on the right side of what promises to be a lasting and lucrative trend.
Ultra high net worth investors are already well ahead of the curve in this.
They see change coming.
So what do they know that you don’t?
“Prior to the pandemic crisis there was a meaningful and increasing focus on ESG investing and it is likely that this focus will only increase following the coronavirus,” Goldman Sachs wrote in a recent note to clients.
The richest investors are funnelling cash into ESG investments at record pace.
According to the Global Sustainable Investing Alliance, $30.7 trillion was reserved for ESG in 2018, with projections rocketing as high as $50 trillion over the next two decades.
Global investment manager Schroders has committed to integrate ESG into ALL its funds by the end of this year.
Larry Fink, the chief executive of the world’s largest fund manager BlackRock, has vowed to double the size of his ESG range.
Within a decade, BlackRock will increase the cash it holds in ESG from $90bn to $1 TRILLION.
Once simply a niche approach, this ESG investing has now proven to be not just market-beating, but market-leading.
Analysts at Bank of America Merrill Lynch reported in 2019 how this investing strategy generates significant alpha.
“ESG could boost your returns by a significant amount,” they write. “Buying stocks that rank well on ESG metrics would have outperformed the market by up to 3ppt per year over the last five years.”
Gone are the days when being more environmentally friendly meant taking a hit on your profits.
And ESG funds entirely avoided the Covid-19 market sell-off in Q1 2020.
According to a Morningstar report, investors rushed to put record-breaking amounts into ESG funds while stock markets fell through the floor.
$384.7bn was withdrawn from traditional equity funds as coronavirus crippled world economies, but global sustainable funds recorded $45.6bn of inflows.
This is exactly what we’re talking about.
Adapt or die.
But what makes a strong ESG investment?
Ideally you are looking for a well-run firm that offers fantastic long-term growth potential with a business model that can contribute something extra back to society.
Sound an unlikely, or even impossible, combination?
This company has identified a huge gap in a multi-billion dollar industry that could both prove to be extremely profitable and have a significantly positive environmental impact.
This sustainable ‘agritech’ firm takes a crippling cost its customers face and converts it into a sizable revenue generator.
And it comes from a source you probably haven’t considered before.
We’re not joking.
For dairy and cattle farmers, disposing of cow manure is perhaps the most challenging, costly and unpleasant aspect of their business.
It limits their growth, can become an extreme environmental hazard and just downright stinks!
But help is now at hand.
“We transform livestock waster into organic fertilizer using our proprietary technology. The heat generated during the drying process is then converted into electricity and sold back to the grid.”
Through our patented technology we upcycle the value of manure, taking it from a cost (to dispose of) to a revenue generator. One ton of manure goes from being worth negative 40 bucks to our customers to positive $200.”
Multiplied by the size of the average herd, that $200/ton quickly adds up.
Solving the persistent problem of manure disposal not only generates buckets of cash, but also fixes an acute environmental headache.
It is no wonder that the company has received so much interest from potential customers.
The farming industry was revolutionized by tech in the 20th Century.
Industrial-grade animal feeding operations like commercialized cattle feedlots helped farmers to rear their herds much more efficiently and profitably.
Now all eyes are on the 21st Century technology that will help farmers to revolutionize the industry again.
Its primary goal?
To become a global force within just a few years.
One partnership in particular has the company especially excited.
Leading British ‘cleantech’ firm CCm Technologies just recently completed new formulation testing with EarthRenew (CSE:ERTH|OTC:VVIVD|F:WIMN) to increase the nitrogen content of its product significantly.
Nitrogen is one of the most vital nutrients that crops need to grow.
Higher levels of nitrogen in fertilizer can boost a plant’s vigour, size, colour and yield.
When it comes to commercial growing, farm operators are constantly looking for that edge to achieve an optimum harvest.
So, fertilizers packed with high levels of nitrogen give an obvious competitive advantage.
9 million dairy cows dot the fields and farms of North America, from California to Wisconsin, Texas to Idaho and Ontario to Quebec.
Those black and white-spotted Holsteins, the big-eyed, dark brown Jerseys and the rusty red and white Ayrshires.
Herd size is getting larger every year. In 1994 the average dairy farm had just 78 cows. By 2003 that number was 129.
Fast-forward 15 years and the average herd size is north of 230.
Some dairy farmers in the East have well over 1,000 head.
Each produces on average between 82lb to 106lb of manure every single day.
And that’s just from milk-producing cattle alone.
There are three times as many steers reared for beef than dairy cows in North America.
It all has to be stored somewhere.
If this manure is managed incorrectly it becomes a huge environmental problem.
A ton of manure from dairy cows contains around 10lb of nitrogen, 4lb of phosphorus, and 8lb of potassium.
While some can be spread on fields to encourage crop growth, too much can degrade soil quality and negatively impact harvest yield, says the United States Department of Agriculture.
If these chemicals leech into the water table the effects can be devastating, contaminating drinking water and poisoning wildlife.
A farmer can spend tens of thousands of dollars every year on manure storage alone.
Imagine taking away that liability and turning it into a valuable product?
Why wouldn’t farmers the world over go for such an elegant solution?
While also doing something positive for the planet.
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