We permit the publication of our auditors’ report, provided the report is published in full only and is accompanied by the full financial statements to which our auditors’ report relates, and is only published on an access-controlled page on your website, to enable users to verify that an auditors’ report by independent accountants has been commissioned by the directors and issued. Such permission to publish is given by us without accepting or assuming any responsibility or liability to any third party users save where we have agreed terms with them in writing.

Our consent is given on condition that before any third party accesses our auditors’ report via the webpage they first document their agreement to the following terms of access to our report via a click-through webpage with an 'I accept' button. The terms to be included on your website are as follows:

I accept and agree for and on behalf of myself and the Trust I represent (each a "recipient") that:

  1. PricewaterhouseCoopers LLP (“PwC”) accepts no liability (including liability for negligence) to each recipient in relation to PwC’s report. The report is provided to each recipient for information purposes only. If a recipient relies on PwC’s report, it does so entirely at its own risk;
  2. No recipient will bring a claim against PwC which relates to the access to the report by a recipient;
  3. Neither PwC’s report, nor information obtained from it, may be made available to anyone else without PwC’s prior written consent, except where required by law or regulation; and
  4. PwC’s report was prepared with Hermes Property Unit Trust's interests in mind. It was not prepared with any recipient's interests in mind or for its use. PwC’s report is not a substitute for any enquiries that a recipient should make. The financial statements are as at 25 March 2017, and thus PwC’s auditors’ report is based on historical information. Any projection of such information or PwC’s opinion thereon to future periods is subject to the risk that changes may occur after the reports are issued and the description of controls may no longer accurately portray the system of internal control. For these reasons, such projection of information to future periods would be inappropriate.
  5. PwC will be entitled to the benefit of and to enforce these terms.
I accept

1. Select your country

  • United Kingdom
  • Austria
  • Australia
  • Belgium
  • Denmark
  • Finland
  • France
  • Germany
  • Iceland
  • Ireland
  • Italy
  • Luxembourg
  • Netherlands
  • Norway
  • Singapore
  • Spain
  • Sweden
  • Switzerland
  • USA
  • Other

2. Select your investor type

  • Financial Advisor
  • Discretionary Investment Manager
  • Wealth Manager
  • Family Office
  • Institutional Investor
  • Investment Consultant
  • Charity, Foundation & Endowment Investor
  • Retail Investor
  • Press
  • None of the above

3. Accept our terms and conditions

By clicking Proceed I confirm I have read the important information and agree to the terms of use.


The Hermes Investment Management website uses cookies to remember your preferences and help us improve the site.
By proceeding, you agree to cookies being placed on your computer.
Read our privacy and cookie policy.

Hermes: Three sustainable investment themes for a low-growth future

Home / Press Centre / Three sustainable investment themes for a low-growth future

26 April 2016

As the world wakes up to the new reality of extremely slow growth, there seems little doubt the returns investors became accustomed to during the ‘Great Moderation’ are a thing of the past, according to Saker Nusseibeh, Chief Executive of Hermes Investment Management.

We believe investors will need to adjust expectations downwards across almost all asset classes in the future, with real returns of 4-5% not unimaginable. Real yields on government debt may struggle to exceed 1-2% at the same time. While investors can receive a premium for corporate instruments, these are likely to experience rising default levels.

It is clear we need to change the way we think about investing. While it is imperative we adopt a long-term mind-set, we must also incorporate notions of responsibility and stewardship into our actions. If we chase an outcome at the expense of the society we inhabit, then these returns serve no real purpose.

Thankfully, the assumption investors would have to sacrifice returns for pursuing positive social and environmental change has long been dismissed. The good news for investors today is there are many long-term sustainable thematic opportunities to explore – in areas such water, urbanisation and cybersecurity.

Water scarcity a major risk to society and global growth
A recent CDP report found water insecurity to be the largest risk to our society as a whole – with failure to manage this scarce resource challenging the economic prospects for countries and overall global growth. Corporates will need to include water management in strategy and investment planning, as well as risk management and mitigation. The good news is leaders are already emerging, with pragmatic water stewardship offering clear benefits to companies.

For investors, a long horizon of opportunities exist in this space – in areas such as water utility equities, corporate infrastructure bonds, water treatment project finance and water technology venture capital. In the immediate future, opportunities for investment are in water treatment and recycling, as well as more efficient usage – with the development and deployment of smart meters, surface and groundwater storage and improved irrigation. There are longer-term opportunities in desalination, water-friendly energy and various other technologies.

Despite barely scratching the surface of what we might achieve, it is estimated these areas alone will represent a market north of $1trn by 2020. Water represents a true long-term secular growth prospect.

The multi-decade opportunity in sustainable urbanisation
The conversion of the earth’s land surface to urban use is one of the most irreversible human impacts on the global biosphere. As a consequence, huge demand is being created for private and public sector infrastructure development – in areas such as power stations, electricity grids, water supply and treatment plants, roads, railways, airports, bridges, telecom networks, schools and hospitals. As with water, investment opportunities are prevalent across the capital structure – from micro finance and community development, through to infrastructure and real estate assets.

Today, more than 50% of the world’s population live in cities – a figure anticipated to grow to over 60% in the next 10 to 15 years. There will be limitless opportunities for infrastructure companies, as the urban projects of the next few decades will be financed by a combination of public finance and private contractors. Equity capital, municipal and corporate bonds, project finance, public private partnerships, private finance initiatives and bank syndicated loans will all represent opportunity for sustainable investment.

The rush to urban centres, particularly in emerging economies, is driven by a desire for an improved lifestyle and greater opportunities. Thriving cities must support businesses by providing connections to distinctive talent pools and critical resources. Environmental management must also be integrated into the plan.

We have seen this in the redevelopment of King’s Cross, with the entire area experiencing substantial regeneration, while delivering a healthy return for investors. Developments of this nature represent incredible investment opportunities, with genuinely positive environmental impacts to play out over decades to come.

A new framework required to avoid ‘Cybergeddon’
Cybersecurity affects the lives of corporations and individuals equally – with more than 80 million threats a year, 70% of which go undetected. A potential worst-case ‘Cybergeddon’ scenario has as much as $3trn of global economic value at risk by 2020. To defend against this threat, the $75bn global cybersecurity solutions market is expected to grow by 250% over the next five years.

There are multiple entry points for investors in this theme – with fast growth anticipated in areas such as analytics, automated response technologies, cloud security and biometrics. Investment in critical infrastructure will be a necessity amid concerns over e-commerce payments, encryption, network security and homeland security.

However, this theme does not simply surround products. The threat of IP losses, legal expenses and reputational losses means cybersecurity risk needs to be embedded in the thinking of corporate boards of directors.

Our stewardship group, Hermes EOS, is asking tougher questions on cybersecurity and brings to our attention those corporates best able to protect themselves. However, this issue needs engagement across the private sector and policy makers alike – with a new global governance framework required.

Find posts by author

  • Alex Knox, ACA
  • Andrew Jackson
  • Andrew Parry
  • Claire Gavini
  • Dr Michael Viehs
  • Emeric Chenebaux
  • Eoin Murray
  • Geoffrey Wan, CFA
  • Harriet Steel
  • Ilana Elbim
  • Jonathan Pines, CFA
  • Joseph Buckley
  • Louise Dudley
  • Mark Sherlock, CFA
  • Martin Todd
  • Michael Russell, CFA
  • Michael Vaughan
  • Neil Williams
  • Nick Spooner
  • Nina Röhrbein
  • Peter Hofbauer
  • Philip Nell
  • Saker Nusseibeh
  • Silvia Dall’Angelo
  • Tatiana Bosteels
  • Tim Crockford
  • Tommaso Mancuso
  • Yasmin Chowdhury
  • Yasmin Chowdhury

Find posts by category

  • eos

Press contacts