Melting glaciers are the most obvious sign of climate change in Switzerland. As they disappear, the freshwater reservoirs dry up and the entire water cycle begins to falter. Melt water will be sorely missed, especially in dry summers. In Asia, it is the retreat of the glaciers in the Hindu Kush and the Himalayas that is irreversibly changing the meltwater runoff and threatening around a quarter of the world's population with waterscarcity. The social and economic consequences are enormous.
But it is not just the lack of ice that will cause problems for humanity: With climatewarming and higher temperatures, more and more water is evaporating. Instead of wetting the soil, the precious water escapes into the atmosphere, which exacerbates drought in drought-prone areas. In Europe alone, annual losses due to drought amount to EUR 9 billion, particularly in agriculture, the energy sector and public water supply. This makes it all the more important to take measures to curb global warming and counteract water scarcity. The increasing urgency of these challenges offers great opportunities for companies with effective solutions.
While the two topics are closely linked, they have a fundamentally different risk profile and different characteristics from an investment perspective. This is evident, for example, in the different sectorallocations and in comparison to a broad global index (see chart).