Resource Scarcity is Shaping Climate Change — Why PE Firms Are The Solution

(Last Updated On: November 6, 2019)

If you believe in the notion that all problems are opportunities in disguise, then you may find
solace in the mounting pressure that draws its breath from resource scarcity and climate
change. In particular, and as conveniently outlined by iShares by BlackRock, curbing climate
change and resource scarcity may be an unprecedented opportunity for business growth,
innovation, and investors.

Some of the “megatrends” defining the course of the future, as outlined by BlackRock, are rapid
urbanization, emerging global wealth, technological breakthrough, social change, and most
relevant here — climate change and resource scarcity.

At the core of this theatre of context is increasing CO2 emissions and their detrimental impact
across various, often overlooked, areas of the environment. For example, extreme weather
events are much more prevalent than only several decades ago, and sea levels have risen
three inches over the last 25 years from melting polar ice caps.

Highlighted by an unbalanced supply-demand axiom in the agricultural sector, the world’s
resources are under progressively tenser strain as populations boom and resources do not
follow suit.

However, where government institutions prove inadequately flexible enough to adapt to evolving
innovation requirements, the private sector has historically proven capable. In particular, private
equity (PE) firms, some of the ultimate purveyors of alternative investments and capital
allocation, are poised to be the solution necessary to address the problems of climate change
and resource scarcity.

Contending With Resource Scarcity & Environmental Pollution

One of the emergent trends in the battle against resource scarcity and environmental pollution is
the coupling of reducing waste with converting that waste into useful products — whether that be
energy or consumer products (e.g., sneakers) made from recyclable materials.

PE firms have historically spearheaded the approach of such trends, and Pure CE is one of
those firms at the cutting-edge of development in cleantech, biotech, and renewable energy. A
PE firm with a strong emphasis on the circular economy, Pure CE’s portfolio encompasses a
spectrum of projects that reflect its underlying ethos:

“People, planet, profit.”

“We undertake to solve some of the world’s pressing socioeconomic and environmental
challenges by creating world-changing businesses that attract private impact investing capital at scale whilst operating in an ethical and responsible manner,” details Pure CE Marketing
Director, Theo Measures.

Pure CE’s portfolio is an excellent canvas for evaluating the ongoing convergence on resource
scarcity and climate change by private firms, and why they are ultimately geared for success.

Emphasizing Circular & Efficient Energy Production

According to BlackRock’s iShares infographic:

“Climate change and resource scarcity will be a driving force behind the actions of consumers,
companies, and governments for years to come…By staying attuned to these trends, investors
will be able to spot long-term opportunities.”

It’s no secret that consumers are more attuned to socially-conscious firms today, especially
those with an emphasis on renewable energy and climate change. And that’s precisely the area
where Pure CE is making an impact with two of its flagship portfolio companies — Purecog and
Peregrine Analytics.

“Purecog enables the conversion of plastic and hazardous medical waste into fuels,” details Mr.
Measures. “Waste subsequently becomes a resource, completing the positive feedback loop of
a circular economy where the focus is on regenerative resources.”

Similarly, Peregrine Analytics focuses explicitly on several advanced technologies that analyze
the chemical constituents of certain resources — from oil in major pipelines to blood and water.
For example, Peregrine can take “fingerprints” of the chemical components of specific sections
of oil pipelines, minimizing contaminants and downstream environmental pollutants in the
process. That same fingerprinting technology can be extended to other areas too, such as
snapshots of blood samples and dangerous chemical evaluations of water supplies.

“Solutions to resource scarcity, and by extension, climate change, are ultimately dependent on
the transition away from the linear economy that drives the massive consumption and waste
cycle plaguing the planet today,” says Paul Gandy, Managing Director of Pure CE.

And regenerative technologies that facilitate the transition to a circular economy are blossoming
amid congruent opportunities for huge positive impacts.

For example, the diminishing global freshwater supply from rising temperatures takes a
significant toll on the ability to produce food to meet an increasing population size. Add in the
fact that roughly 30 percent of harvested food is wasted, and it is clear that the clock is ticking.

As an interesting caveat, populations actually grow at slower paces with increasing
development measured in Real GDP. Natural filters of population growth are subsequently an outlay of technological advances, particularly in developing nations where population rates are
booming.

And that’s precisely why PE firms are poised to have a significant impact on climate change
outside of sector-specific technological advances like Pure CE’s portfolio of Purecog and
Peregrine Analytics. PE firms can make impacts in parts of the developing world that need it the
most when those countries’ governments cannot compensate for the rate of population
expansion coupled with deteriorating harvests, water supplies, and other resources stemming
from climate change — many of which are a consequence of consumption in the developed
world.

As recently outlined by a report from the Global Commission on Adaptation:

“[Those most affected by climate change] did the least to cause the problem – making
adaptation a human imperative.”

PE Firms are subsequently the financiers and driving forces behind the technological innovation
necessary to foster the type of adaptation that the world requires. And considering that 188
IPOs raised more than $45 billion in 2018, investor opportunity to build wealth on the success of
PE firms and their umbrella companies may be at an all-time high.

Of all the trends molding the trajectory of the future, climate change and resource scarcity are at
the forefront of social consciousness and technological purview. PE firms have traditionally
served as the foundation for meeting the demands of society, but this time their task is much
more global in nature.

In spite of the arduous task at hand, PE firms like Pure CE are the best chance at overcoming
the challenges ahead, with technology as their brush and their canvas of opportunity disguised
as the problems of resource scarcity and climate change.

v

lapreneuer

Lapreneur is a contributor at So Influential.

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