It’s impossible to overstate water’s importance as an indispensable resource for life on earth. Living in the UK, we’re incredibly fortunate to have the infrastructure and technology that give us clean water literally on tap (something we take for granted). Two things are critical to keep the taps running. First, guaranteeing enough supply. And, secondly, ensuring that this supply is clean and safe. Both goals are getting harder.
Population growth and urbanisation are significantly increasing demand for water from households to industry and farms. Meanwhile, water is getting more scarce. Climate change is altering weather patterns, resulting in more unpredictable rainfall that brings extra droughts and flash floods that can disrupt freshwater supplies. Since water is a finite resource, the water industry faces stiff pressure to conserve, treat and reuse as much of it as possible.
That means water companies must tackle the increasing contamination of water. Polluted water can lead to numerous health and environmental problems. And that’s encouraging environmental groups to lobby their governments more forcefully for tougher regulation of water companies so they take greater responsibility for water quality. This, along with the public outcry over some water companies’ perceived failings (look no further than Thames Water and United Utilities here in the UK), is driving tighter regulation of both drinking and wastewater. Water safety violations are increasingly resulting in hefty fines and bad publicity that can hurt company values. As a result, companies have been forced to implement more effective water treatment processes putting them firmly on the hook for the quality and safety of the water flowing through to customers’ taps and for the wastewater they discharge into the sea, rivers and waterways.
The journey from test to tap
But better water treatment is only part of the story. The final, crucial step for the water industry is the testing needed to prove their water is safe. Regular analysis helps to identify harmful contaminants such as bacteria, metals and pesticides that can pose serious health hazards. It’s also essential for protecting ecosystems and preventing ecological damage caused by pollutants.
We view this testing step as an increasingly investable area, which is why we own shares in US water company Veralto in our Rathbone Greenbank Global Sustainability Fund and in our Rathbone Greenbank Multi-Asset Dynamic Growth Portfolio. Hach is one of Veralto’s best-known global water testing brands in its water quality segment and is recognised as being among the forefront of simple and reliable water testing. Its instruments and digital solutions test, analyse and monitor water quality for roughly 150,000 customers, from small community water utilities to large public and private water utilities and industrial companies. In total, Hach helps to ensure more than 3.4 billion people (that’s 40% of the global population!) get safe water every day.
Hach’s testing kit meets the needs of a wide range of sectors, including towns and cities, factories, high-end computer chip manufacturers and for environmental applications. Its key products and technologies have been used and trusted for many decades, while its focus on innovation has enabled it to stay ahead of the competition. It sells spectrophotometers that are deployed in labs to analyse water quality. They do this by measuring the intensity of light that water samples absorb to determine the concentration of specific substances/potential contaminates within those samples. And its turbidimeters measure the turbidity (cloudiness) of water – an important parameter for assessing water quality and the effectiveness of water treatment processes. Turbidimeters can show that harmful particles have been removed from water, confirming that treated water is safe to drink, or, in the case of wastewater, to be discharged.
In addition to these testing instruments, the company also offers its customers software that allows them to monitor water quality constantly in real-time – something that’s crucial for to keep water consistently safe. The information provided is integrated with the data collected from lab testing into a digital online platform. This platform provides comprehensive insights, allowing Hach’s customers to spot any water quality concerns quickly and adapt their water treatment practices to remedy them.
Looking to the future, we believe that physical testing complemented by digital monitoring solutions will prove a must for businesses that use large amounts of water (and, spoiler alert, there are lots of them). Veralto already offers products in both arenas so we expect to see rising demand for its innovative kit that can help companies safeguard human health, protect the environment and operate more efficiently.
Water scarcity makes it vital for everyone to re-use and recycle as much as we can. If we want to continue to take clean water for granted, we believe water testing companies like Veralto will play an increasingly important role in keeping our taps running!
