Capitalising on the

longevity economyInvestment Conference 2019

Megatrends: urbanisation

and waste management

Bertrand Lecourt

Portfolio Manager

Fidelity International

Source: Fidelity International, 30 September 2018. Waterfootprint.org.

Check your own water footprint: http://waterfootprint.org/en/resources/interactive-tools/personal-water-footprint-calculator/ https://www.watercalculator.org/wfc2/complete/

How much water in…

Water: it’s more than drinking and washing

Did you know?

Food

Slice of

bread

Cup of coffee250 ml

beer

1 kg

meat

1 kg

cheese

1 egg

42 31 65

Water use example: Emerging market, Brazilian consumer average 5,600 litres of water a day per person

40 1407515,500 5,000200

Source: Fidelity International, 30 September 2018. Waterfootprint.org.

Check your own water footprint: http://waterfootprint.org/en/resources/interactive-tools/personal-water-footprint-calculator/ https://www.watercalculator.org/wfc2/complete/

How much water in…

Water: it’s more than drinking and washing

Did you know?

Clothes

1 piece of

paper A4

CarComputerJeans 1 cotton

t-shirt

1 pair of

shoes

48 97 65

Water use example: Emerging market, Brazilian consumer average 5,600 litres of water a day per person

10 144,30031,5001,900 2,7008,000

Accessories

“The story of water and waste is the story of people.

There is no economy without water, no sustainable

economy without waste management.”

Source: Fidelity International, 30 September 2018.

Source: Fidelity International. 1 United Nations, Department of Economic and Social Affairs, May 2018.

Waste and water needs are growing faster than global GDP

The planet needs water and waste management…always will

WaterMega trend since

the dawn of

civilisation

Sustained growth

WasteThe other side of

wealth creation

New source of

growth

Megatrend Common groundsLong-term drivers

c.70% of World population expected to live in Cities by 20501

Clean water & sanitation needs Need to manage wasteMore people living in cities

Increasing middle class consumption in emerging markets

Water intensive goods More waste generatedHigher wealth & consumption

Ageing infrastructure in the western world / new projects in emerging markets

Network repairs and new build Investment in waste solutionsMore infrastructure pressure

High standards of healthcare regulation create added value for new services and technologies

Outsourcing and new markets Outsourcing and new marketsRegulation & health needs

Fresh water is becoming scarce and waste becomes a resource

New technologies and solutions Use waste as resourceResource & scarcity

Source: IMO, https://www.hexaresearch.com, August 2018

Global ballast water treatment systems (BWTS) market The introduction of foreign species is considered to be one of

the five major threats to aquatic biodiversity

Example of regulation: ballast water treatment

0

50

100

150

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Container Ships Dry Bulk Carriers Tankers General Cargos

Source: McKinsey & Company, Water 2030 Global Water Supply and Demand

model; agricultural production based on IFPRI impact-water base case. Existing

withdrawals based on 2010 agricultural production analyses from IFPRI.

Water use increases with population Aggregated global water gap by 2030, billion m3

Water gap is increasing - driven by a growing need for food, goods, energy and health

0%

100%

200%

300%

400%

500%

600%

700%

800%

900%

1000%

190

0

191

0

192

0

193

0

194

0

195

0

196

0

197

0

198

0

199

0

200

0

201

0

202

5

Water Withdrawals (projected)

Water Consumption (projected)

Population (projected)

Perc

ent gro

wth

fro

m 1

900

baselin

e

More

volume

Source: Fidelity International, Shikomanov 1999, US Census bureau 2011.

3100

4500

3500

800

1500

700600

900

2800

100

Existingwithdrawls

2030withdrawls

Basins withdeficits

Basins withsurplus

Existingaccessible,

reliable,sustainable

supply

Relevant supply

quantity is much lower

then the absolute

renewably water

availability in nature

Surface

water

Ground

water

Agriculture

Municipal &

domestic

industry

2% CAGR ~40%WATER

GAP

4200

Source: Fidelity International, Global Water Intelligence 2015 Survey.

Integrated water tariff ($/m3) vs GDP/head ($) vs population size (bubble)

Room for global water prices to grow - water prices offer significant upside in developing countries

DenmarkAustralia

GermanyUK

France

Canada

United States

Poland

Singapore

Spain

Brazil

Portugal

Japan

Italy

Switzerland

Netherlands

New Zealand

Sweden

Belgium

Philippines

Argentina Chile

Tunisia

Turkey

Russia

Korea, Rep.

MexicoChina

India

$1,000

$10,000

$100,000

$-1.00 $- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00

Log ScaleGDP/Head

($ 2015)

Drinking & Waste Water ($/m3)

Average price (drinking + w aste water)

More

Price Upside

Source: Fidelity International.

Investing in the water value chainFocus on all industries exposed to the water cycle

Raw water

source

Rivers,

lakes, sea,

aquifer

sources,

etc..

Treatment/

purification

(chemical,

filters,

bacterial,

etc…)

Storage

(dams,

lakes,

reservoirs,

water

towers,

etc…)

Transport/

distribution

(network)

Supply

(metering,

billing, etc…)

Water

release

Rivers,

sea, lakes,

etc…

Irrigation/agriculture/farming

~70%

Water quality, tests, metering

Plant design, municipal & industrial planning, engineering, water related services

Intake

(Pumping,

valves,

desal, etc…)

Municipal/

domestic use

~10%

Energy, power, industrial, commercial

(incl. oil & gas, mining & other)

~20%

Bottling,

drinking market

Release

Waste water

treatment &

recycling

Source: Fidelity International, ISWA: The International Solid Waste Association. October 2013.

Past and projected global waste generation Projected waste generation by region

(SSP2, business as usual)

Waste market to double in the next 10 years. The next green gold - inflection point with significant global growth

0

2

4

6

8

10

12

1900 1925 1950 2000 2025 2050 2100

SSP1 SSP2 SSP3

Waste

ge

ne

ratio

n

(mill

ion

s o

f to

ns p

er

da

y)

Waste

ge

ne

ratio

n

(mill

ion

s o

f to

ns p

er

da

y)

0

1

2

3

2010 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Sub-Saharan Africa East Asia Pacific

Europe & Central Asia South Asia

Latin America & Caribbean Middle East & North Africa

High Income & OECD countries

▪ Three projections to 2100 for waste generation spell very different futures. In the first Shared Socioeconomic Pathway scenario (SSP1), the 7 bn. population is 90% urbanised,

development goals are achieved, fossil-fuel consumption is reduced and populations are more environmentally conscious.

▪ SSP2 is the ‘business as usual forecast’, with an estimated population of 9.5bn and 80% urban.

▪ In SSP3, 70% of the world's 13.5bn live in cities and there are pockets of extreme poverty and moderate wealth, and many countries with rapidly growing populations.

Source: Fidelity International, OECD, 2015.

Municipal waste in kg/head/year vs GDP/head ($) vs population size (bubble)

Waste generation increases with wealth ‘Waste side story - the other side of consumption

Algeria

Australia

AustriaBelgium

Brazil

Canada

Chile

China

Croatia

CyprusCzech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hong Kong SAR, China

Hungary

Iceland

India

Italy

Japan

Korea, Rep.

LatviaLithuania

Mexico

Morocco

Netherlands

New Zealand

Norw ay

Peru

Poland

Portugal

Romania

Russia

Singapore

Slovak Republic

Slovenia

Spain

Sw eden

Sw itzerland

Thailand

Tunisia

Turkey

UKUnited States

1000

10000

100000

-200 0 200 400 600 800 1000 1200

Log Scale

Waste kg/head/year

GDP/head

More

waste volume

Source: National Geographic, June 2018.

Global plastic production by industry

(in millions of tons)

Cumulative plastic waste generation and disposal

(in millions of tons)

Plastic: a good example of the waste market

1950 1960 1970 1980 1990 2000 2010 2015

100

200

300

400

1973 oil crisis

2008 recession

Building and construction72 million

35 years

Less than six months

Packaging161 million

3 years

Consumer products46 million

5 years

Textiles65 million

8 years

Electrical19 million

13 years

Transportation30 million

20 years

Industrial machinery3 million

5 years ◄ the average time plastics are

used before they’re discarded

Other52 millionincludes health care and agriculture

Total448 million tons produced in 2015

The first plastics made from fossil

fuels are just over a century old. They

came into widespread use after World

War II and are found today in

everything from cars to medical

devices to food packaging. Their

useful lifetime varies. Once disposed

of, they break down into smaller

fragments that linger for centuries.

0

5,000

10,000

15,000

20,000

25,000

195

01

95

51

96

01

96

51

97

01

97

51

98

01

98

51

99

01

99

52

00

02

00

52

01

02

01

52

02

02

02

52

03

02

03

52

04

02

04

52

05

0

Primary waste generated

All waste discarded

All waste incinerated

All waste recycled

Today

Tomorrow

(2050)

Source: Fidelity International, http://advances.sciencemag.org/. Production, use, and fate of all plastics ever made Roland Geyer, Jenna R. Jambeck, Kara Lavender Law. 2017.

(1950 to 2015; in million metric tons)

Global production, use and fate of polymer resins, synthetic fibers and additives

100

Primary production 8300

In-use stocks 2500 primary

Discarded 4900

Incinerated

800

Recycled 600

Secondary

100

100500

700300

4600

Source: Fidelity International.

Waste stocks in the value chain

Commercial,

construction &

industrial waste

Municipal waste

Hazardous waste

Oil, medical waste,

e-waste, nuclear

waste, etc…

Transport/logistics

HW

collection

Grouping

platform

Source

Air pollution Air quality management, pollution control, filters

Waste treatment

Composting facility

Sorting and

recovery facility

Waste to energy

Recycling units

HW treatment

Stabilization / landfills

Output

Landfills

Clean air

Energy

(Power, gas, heat)

Secondary raw materialsPaper, wood, plastic, ferrous and non-ferrous metals etc…

Agricultural

fertilizers

Refuse-derived

fuels (RDF)

Secondary raw materials

Oil, solvent, noble metals,

catalysers, rare earth

Municipal service

▪ Street cleaning

▪ Bins collection

▪ Sewage cleaning

Services

On-site industrial services

▪ On-site sorting, recycling, treatment,

▪ On-site collection

▪ Industrial cleaning

Hazardous waste (HW) services

▪ On-site HW management

▪ Industrial maintenance

▪ Remediation

Pre-sorted collection

Drop-off centre

Transfer stations

Traditional collection

C&I collection

Recyclable collection

Non-recyclable

Source: Fidelity International, Waste represents BNP Paribas Global Waste Management Index, Water represents S&P Global Water Index, World represents MSCI AC World

Index. 30 September 2019. All indices represent total returns in USD.

Lead drivers supporting water and waste

1 2 3

Population growth Urbanisation rate Infrastructure gap

4

567

Scarcity and resourcesHealth issues and regulationScarcity and weather

8

Wealth creation and consumptionFew global players

Historical performance

Water

Waste

World

50

150

250

350

Ju

n-0

5

Sep

-06

De

c-0

7

Mar-

09

Ju

n-1

0

Sep

-11

De

c-1

2

Mar-

14

Ju

n-1

5

Sep

-16

De

c-1

7

Mar-

19

Water and Waste Indices vs MSCI ACWI

Source: Fidelity International, Bloomberg, 30 September 2019. Waste Index represents BNP Paribas Global Waste Management Index, Water Index represents S&P Global

Water index. All indices represent total returns in USD. Custom index performance measured using monthly rebalance.

Investment opportunity

50

100

150

200

250

300

350

400

Jun

-05

Jun

-07

Jun

-09

Jun

-11

Jun

-13

Jun

-15

Jun

-17

Jun

-19

Reb

ase

d to

10

0

30.09.14 -

30.09.15

30.09.15 -

30.09.16

30.09.16 -

30.09.17

30.09.17 -

30.09.18

30.09.18 -

30.09.19

Global

Waste

Index

-3.3 14.1 18.9 -1.0 11.9

Global

Water

Index

-2.5 18.9 13.6 3.8 12.0

MSCI

ACWI (N)-6.7 12.0 18.6 9.8 1.4

MSCI ACWI

Water Index

Waste Index

Source: Fidelity International, Bloomberg, data collected on 292 stocks in the investment universe. As at date: 31 December 2017.

Total market cap size ($m) vs investable stocks Average market cap ($m)

Sustained new investment opportunities in water and waste.From 30 to ~300 stocks since 1990 and growing market cap

~300 investable stocks, x10 since 1990

Approximately ~10 new stocks per year on average,

(The chart does not take into account stocks that have been taken over)

$3.5bn avg mkt cap x5 since 1990

The average market cap has increased steadily over time as the sector has

grown, from $650m in 1990 to $3.5bn today.

0

50

100

150

200

250

300

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Jan

-90

Jan

-92

Jan

-94

Jan

-96

Jan

-98

Jan

-00

Jan

-02

Jan

-04

Jan

-06

Jan

-08

Jan

-10

Jan

-12

Jan

-14

Jan

-16

Num

be

r of s

tocksM

kt

Cap

in

$m

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

199

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

201

6

Source: Fidelity International, 31 December 2018. For illustrative purposes only. Opportunity set shown is representative of typical criteria, but may change from time to time in

order to ensure desired investment characteristics are achieved in line with the fund’s investment objective as stated in the prospectus.

Impact monitoring and ESGActively focused on impact investment

For illustrative purposes only

Annual impact

Based on

amount you wish

to invest

Cumulative

impact

From start date of

your investment

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