Positive Outcomes summary
Positive Outcome companies are those where benefits for people and the planet make up the majority of their business, and which are held in NZ retail funds. Mindful Money has a rigorous process to select candidates and regularly reviews their ongoing eligibility.
Explanation of Water and Nature theme
The theme covers solutions to the growing challenges relating to provision of freshwater (on which human life relies) and the enormous strain human activity places on the environment. The challenges include pollution, destruction of natural ecosystems for crops and agriculture, and intensive water usage. The impacts of economic activities on nature are usually treated as ‘externalities’ by companies who do not recognise benefits from natural services, for example the value of bees in pollination, or the negative impacts of their activities on the environment.
Billions of people in the world still lack access to clean drinking water and sanitation or are exposed to pollution in drinking water and water systems.
There is growing awareness of the need to reverse harm to the systems we rely on. Climate change is increasing the frequency and severity of natural disasters such as heatwaves, wildfires, droughts, floods, and cyclones. Most of the cost of dealing with harm is being carried by governments, local communities or not-for-profit charities. However, there is now more focus on ways to increase investment funding for solutions and innovation to meet these challenges.
Sub-Categories and criteria
Water: For an entity to qualify for the Water sub-category, Mindful Money requires evidence of significant positive outcomes for communities and natural ecosystems through:
1) Innovation in water treatment or sanitation services in line with SDG6. Specifically, wastewater treatment should remove at least 95% of contaminants including nitrogen and phosphorus. Water pollution, including from ‘forever’ chemicals (also called PFAS) threatens human health.
2) Increasing access to water for underserved communities. Entities focused on providing new access to water, or who have developed technology that makes it easier to connect communities to supply.
3) Solving challenges for sustainable supply of water. Entities developing innovation to improve efficiency of water use in regions where there is high-risk of water scarcity.
Note, we have not included water utility companies (there are many across the world) who provide water services but who do not maintain infrastructure or manage operations well enough to avoid pollution which has a high impact on communities and ecosystems.
Ecosystem regeneration covers entities and finance solutions that are focused on regenerating forests, wetlands, and river and ocean ecosystems alongside financial returns.
Within the Water and Nature theme, there are a small number of entities. However, there is growth potential due to the scale of the challenges and demand for better solutions. Recent innovation in finance vehicles to support restoration of ecosystems has opened up more opportunities for investors to support positive outcomes in this critical theme.
Why is each category important?
Water & Sanitation Innovation
Innovation in water treatment and sanitation improves public health, climate resilience, and the reliability of essential infrastructure. Water, sanitation, and hygiene is a fundamental human right and essential for health. Yet the UN reports that in 2024 2.1 billion people were without safely managed drinking water, 3.4 billion without safely managed sanitation and 1.7 billion without basic hygiene services.
As populations grow and contaminants become more complex, traditional systems are struggling to keep pace. New technologies can help water and sanitation providers to remove emerging pollutants more effectively, reduce energy use and cut operating costs. Communities in many advanced economies are realising there has been contamination from per- and polyfluoroalkyl substances (PFAS, also known as ‘forever chemicals’) which are long‑lasting chemicals that accumulate in the body and environment, and create increased risk of serious health impacts.
Many regions face challenges with water scarcity, which are being amplified by climate change. New innovation can offer ways to manage water resources more effectively and efficiently.
Company Example: SciDev
An Australian company that develops customised water treatment solutions to remove harmful contaminants including PFAS from wastewater, groundwater, surface water, and industrial liquid waste. This allows for the safe reuse or discharge of water back into the environment.
Ecosystem Regeneration
Kiwis care a lot about the health of our natural environment and see protecting biodiversity as something with very high intrinsic value. Healthy natural systems also underpin the stability of economies and communities. Protecting and restoring ecosystems strengthens climate resilience, reduces risks from disasters (including to infrastructure), and improves the ability of nature to provide resources that industries rely on.
There are new financial tools that offer the potential to provide new sources of funding to complement public and donor funding for ecosystem protection and restoration. New start-up companies are also harnessing innovation in drone technology and AI to protect wilderness areas through early warning of fires and floods.
Native Forests Restoration: CarbonCrop
This New Zealand company helps landowners to map their properties and plan which areas have high potential for native forest replanting and restorations. Owners of high value ecosystems can also gain revenue from selling carbon credits to companies that want to offset the emissions they generate. Credits with additional biodiversity benefits attract a premium and advanced mapping is essential to create high-quality nature-based carbon credit schemes.
River System Regeneration: Netherlands Water Bank (NWB)
This financial institution provides funds to Dutch water authorities for interventions to improve water quality and biodiversity. A key project NWB supports is the Delta Plan for Biodiversity Recovery which is returning nature to waterways and improving flood protection in the Netherlands. Retail funds can include NWB’s traded water bonds within portfolios. The NWB bonds meet the criteria for the European Green Bond Standard, as they support climate change adaptation and mitigation, and biodiversity improvement in the region.
Wetlands Regeneration: Triodos Bank
This Dutch bank’s financing of Oxygen Conservation demonstrates how nature‑based carbon credits can be used to turn ecological restoration into a viable investment. Triodos provided a £20.5 million loan for the purchase of 23,000 acres of ecologically significant Scottish land, including peatlands and upland areas that are crucial for storing carbon and biodiversity. The funding enabled planting of new native woodland and restoration of damaged peat soils, one of the UK’s most carbon‑dense ecosystems, so they stop leaking CO₂. These restored landscapes generate verified nature-based carbon credits. Revenues from the credits will repay the loan and fund ongoing interest payments.
Investment considerations relating to Water and Nature
Investment can provide direct impact in this theme through specific finance tools and innovations. There are more opportunities for investment thanks to financial innovation and new technologies. Each extra dollar of investment supports solutions to grow faster or to reach more users.
A key area of financial innovation is the development of Sustainable Bonds as a category. These have both financial and non-financial benefits, and like all bonds, provide stable returns to investors through interest payments. Sustainable bonds need to meet the principles of the International Capital Management Association (ICMA), and other accreditation bodies. Mindful Money includes bond holdings in the total percentage of investment for any entity.
Key bond types which can provide positive outcomes for water and nature are:
- Green Bonds - provide funding for projects with climate or environmental benefits. The EU has detailed criteria for green bonds issued within the zone. They can also be certified as meeting the criteria of the Climate Bond Initiative (CBI). Water projects can meet green definitions as improvements have high climate mitigation and environmental benefits.
- Sustainable-Linked Bonds and Conversation Bonds offer a way to add private funding for nature conservation projects to funds from government and donors. The rate of return is linked to achievement of target conservation goals.
Another emerging area for investment to support ecosystem improvements is nature-based carbon credits. These are verified units that represent the CO₂ either removed from the atmosphere or avoided through actions in natural ecosystems, e.g. forests, soils & peat habitats, wetlands, or coastal systems. (Note, we do not include carbon-credit schemes linked to exotic forests - as these will be harvested, storage is not permanent.)
Companies innovating with water and treatment of pollution may be less established. Given the high demand globally for new solutions to challenging problems, there is long-term potential for growth. However, newer companies face risks during the development phase. A fund manager manages these risks by holding small percentages within a highly diversified fund.