“Net zero” is not the only destination that we must reach if we are to live in a sustainable way.

A much broader global transition to a sustainable operating model is underway.

Everything from how we move around, what we eat, how we source materials and the way we produce energy is changing.

The extractive and – to be frank, often destructive – model of the last two hundred years or so is almost at an end.

A big part of this transition to a sustainable new world involves looking after something called natural capital.

Natural capital is what we call all the natural elements in the world – our air and water, forests and fields, seas and rivers.

And the natural capital is being depleted.
Looking at the bigger picture, the amounts of money involved are stupendous.

In 2013, the TEEB for Business Coalition published a famous report which estimated that the world’s primary production and processing sectors are responsible for “environmental externality” costs totalling a staggering $7.3 trillion annually.

So, what does all this mean in practice?

When natural capital means air

The problem of air pollution is enormous, and massively underappreciated. It is responsible for 1 in 10 premature deaths globally, which is more than AIDS, tuberculosis, and malaria… combined.

Thus, it’s responsible for 7 million deaths each year.

And 9 in 10 people in the world live in places where air pollution exceeds the WHO’s recommended limit.

Tackling this is one of the key reasons for some of the major elements of decarbonisation.

These elements include electric vehicles (EVs), which massively reduce the combustion of fossil fuels in densely populated areas.

They also include solar and wind power, which replace gas and coal as the sources of electricity for heating and lighting in our homes and workplaces.

But there are also technologies for extracting harmful chemicals from the air, like scrubbers (EGCS – exhaust gas cleaning systems), which are used to “scrub” the emissions coming out of combustion processes, for example at coal power plants or on massive ocean tankers (which are coming under strict regulations in the International Maritime Organisation’s IMO 2020 regime).

And there are numerous companies, some publicly listed, which are tackling the problems of air pollution using other technologies.

As understanding of the need to preserve natural capital grows, there will be massive opportunities relating to clean air for investors.

However, that is a story for another time.

When natural capital means water

Floods happen quickly and dramatically. They often happen in rich places where the media and communications are well established. They generate a lot of noise – and particularly as they can often be linked to climate change.

For instance, just think about the massive floods in Germany and other parts of Europe in July last year.

However, at a global level, the depletion of natural capital does not involve a surplus of water, but a deficit.

In fact, water conservation has never been more crucial than it is today.

Droughts tend to affect poorer places that have relatively little in terms of media and communications and tend to generate much less attention than floods.

In the last two decades alone, the United Nations estimates drought has affected 1.5 billion people and led to economic losses of at least $124 billion.

No continent, except Antarctica, has been spared, according to the SPEI Global Drought Monitor.

Luckily, the world is waking up to this crisis, and numerous companies are working hard on tackling it. For investors, this is another huge opportunity.

Whether it’s through improved infrastructure, reduction of water usage, or a technology like desalination, there are plenty of investible themes within the space.

There are a lot of exchange-traded funds (ETFs – funds which provide portfolios of companies that are involved) and individual companies.

Which are the most attractive?

Watch out for the companies that are working on clean air.

When natural capital means (mineral-bearing) rock

If natural capital involves mineral resources, the depletion of that natural capital can include the loss of human lives.

This need not be the case.

In many situations, much of the work in mining can be done by robots – or, more specifically, autonomous vehicles (AVs).

AVs are being adopted in mines far faster than on roads.

This is because pre-set pathways, predictable obstacles, and a lack of variables in private mine sites make it much easier to program the AVs’ routes, and there is lower chances of surprise disruptions along the route (e.g. dogs running into the road, pedestrians who are not looking or other drivers who ignore red lights).

And all this has specific benefits for mining operations.

For instance, it helps to decarbonise operations, as AVs are almost always electric (EVs are much simpler to operate, with fewer moving parts, making them easier to automate).

AVs also reduce the risk of injuries at mine sites by minimising the number of people who are required around mining equipment.

In war, technology keeps people – human soldiers – out of harm’s way. It is the same with mining, thanks to AVs.

Caterpillar is one company which has been offering AVs to miners since 2013.

The key product is Cat MineStar Command. So far, it has hauled over 2.5 billion tonnes of material for Caterpillar’s clients that operate mines.

Command reduces operational costs of mines by 20% and improves productivity by 30%, while reducing safety-related incidents by 50%.

It enables near-continuous operation, supports integration with other existing systems, and helps reduce downtime by alerting maintenance workers on machine problems.

This is not a recommendation to buy Caterpillar. Command is just one small aspect of the business of what is a huge multi-national company.  

Nevertheless, Command is an excellent example of what can be achieved with AVs.

A sustainable new world involves preservation of Natural Capital.

And technology is at the centre of almost all solutions to this problem.