Green Infrastructure: Pollution Control | ETF Trends

By Kendall Harrow
Content Strategy Analyst

As more companies make their operations greener to satisfy consumers and government regulations, they may adopt solutions from pollution control companies, contributing to industry growth.

Green infrastructure is the range of systems and technologies that enable and provide for a more sustainable way of living. In this blog series, we will outline seven specific areasgreen transportationgreen energy, green fuel, waste management, green infrastructure & equipment, pollution control, and green constructions. We will define these themes, how they contribute to green infrastructure and how they are instrumental to the space as a whole moving forward.

Pollution control attempts to minimize the effect of harmful contaminants on the environment, including air, water, and soil. It is an important component to green infrastructure that incorporates features designed to reduce pollution, both at its source and by containing pollutants after they are produced. For instance, creating charging infrastructure to support electric vehicles, which decreases transportation emissions, reduces pollution at its source. The example of permeable pavement, which improves the quality of runoff water, traps pollutants that have already been introduced into the environment.

Every company can develop measures to cut back on the pollution they generate, however, certain companies are directly contributing to pollution control. One example is Ecolab,1 which works on water treatment and energy management. Nalco Water (an Ecolab company) uses smart technology in its water systems to collect data and detect system disruptions in order to conserve water. This contributes to pollution control by saving the emissions that come from treating water after use. Nalco Water also optimizes the chemical amounts used when treating water through its 3D TRASARTM Technology for Dissolved Air Flotation system.2

Another example is Donaldson Company,3 which produces air filtration systems. These systems allow different types of machines (from trucks to disk drives) to run efficiently and maximize productivity, therefore, reducing energy usage and operating expenses. Donaldson’s products span across many industries, including agriculture, manufacturing, and transportation.

The investment case for pollution control companies, like Ecolab and Donaldson, stems from increased demand from consumers who have growing concerns about the health consequences caused by polluting businesses. As companies seek to make their supply chains and operations more environmentally friendly to satisfy consumers, they may adopt solutions from pollution control companies, therefore, leading to growth and an increase in revenue.

Additionally, governments are introducing incentives to curb pollution, resulting in subsidies, favorable tax treatment, or grants, which can lower the costs of pollution control companies. They are also enacting regulations that punish polluting companies through fines or taxes, or force them to drastically change their business practices, resulting in increased costs. Pollution control companies are better positioned ahead of this regulatory risk. For instance, carbon pricing models are making it more expensive for companies to pollute by placing a tax on emissions, which increases demand for the technology and equipment created by pollution control companies. In some situations, those that emit fewer emissions can benefit from selling their unused carbon credits to bigger emitters.

As more companies and governments set goals to reach net zero and establish other emissions reduction targets, pollution control is becoming increasingly important from regulatory and financial standpoints. Pollution control can decrease costs by lowering the resources consumed, such as energy. Preventing pollution at its source is the most effective way to avoid costs that may arise from lawsuits or mandated environmental cleanups. Recently, 3M Co. reached a settlement of $10.3 billion for contaminating drinking water across the U.S. with ‘forever chemicals.’4

Global Air and Water Pollution Control Equipment Market Size, 2022-2028 (USD Billion)

Bar chart showing the global air and water pollution control equipment market size from 2018 to 2028 with $31,840,000 in 2022 and $40,750,000 in 2028.

Source: Business Research Insights, April 2023.

Pollution control is crucial when developing green infrastructure and affects all aspects, such as the materials used, where they are sourced from, the utilization, maintenance required, and more. As businesses face increasing scrutiny to better manage their emissions, pollution control companies are poised to experience greater demand and innovation.

Investors can access pollution control companies with the VanEck Green Infrastructure ETF (RNEW). The ETF provides diversified exposure to companies across the seven green infrastructure sub-themes.

Originally published by VanEck on August 29, 2023. 

For more news, information, and analysis, visit the Beyond Basic Beta Channel.


Important Disclosures

Sources:

1 Ecolab is 5.26% of net assets of the VanEck Green Infrastructure ETF (RNEW) as of 8/22/2023.

2 Ecolab.

3 Donaldson Co Inc is 3.22% of net assets of the VanEck Green Infrastructure ETF (RNEW) as of 8/22/2023.

4 “3M Reaches $10.3 Billion Settlement in ‘Forever Chemicals’ Suits,” The New York Times, as of June 22, 2023.

This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its employees.

Sustainable investing strategies aim to consider and in some instances integrate the analysis of environmental, social and governance (ESG) factors into the investment process and portfolio. Strategies across geographies and styles approach ESG analysis and incorporate the findings in a variety of ways. Incorporating ESG factors or Sustainable Investing considerations may inhibit the portfolio manager’s ability to participate in certain investment opportunities that otherwise would be consistent with its investment objective and other principal investment strategies.

ESG investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by VanEck or any judgment exercised by VanEck will reflect the opinions of any particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and VanEck is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful. An investment strategy may hold securities of issuers that are not aligned with ESG principles.

An investment in the VanEck Green Infrastructure ETF (RNEW) may be subject to risks which include, among others, green infrastructure companies, green energy companies, environmental services industry, green investing strategy, industrials sector, energy sector, consumer discretionary sector, utilities sector, information technology sector, equity securities, micro-capitalization securities, small- and medium-capitalization companies, market, operational, index tracking, authorized participant concentration, new fund, absence of prior active market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified and concentration risks, all of which may adversely affect the Fund. Micro-, small- and medium-capitalization companies may be subject to elevated risks.

Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider a Fund’s investment objective, risks, charges and expenses carefully before investing. To obtain a prospectus and summary prospectus for VanEck Funds and VanEck ETFs, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus for VanEck Funds and VanEck ETFs carefully before investing.

© 2023 Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.