Thomas Schumann Capital’s purpose-driven mission and investment products advance Water Security, United Nations Sustainable Development Goal #6 in public and private markets.
Minimising Water risk in investments
TSC was founded in 2011 by Thomas Schumann. A world-leading solutions provider of water security and responsible investing, the company’s goals are aligned with UN Sustainable Development Goal 6: ‘Ensure availability and sustainable management of water and sanitation for all’.
TSC’s mission is to provide investors, asset managers and financial institutions with the tools and transparency they need to incorporate financial water risk into investment strategies, enabling them to achieve sustainable equity market performance.
Water usage and stewardship are a source of major financial risk that is largely absent from equity valuations today. This risk directly translates to earnings risk which can negatively impact stock prices and investment performance in the future. If water risk remains unaccounted for in benchmarks, investors have little or no reliable means to reduce exposure to companies with high water risk.
TSC’s aim was to quantify water risk and build company rankings fuelled by data on water utilisation, water stewardship and environmental controversies. To do this, they set out to launch the world’s first water security indices.
To achieve this aim, collaboration with a leading water and sustainability data provider was essential to provide the rich data and unrivalled expertise required to create a ground-breaking index methodology.
The TSC Water Security Index® Family are equity benchmark indices which measure the performance of large capitalisation stocks, weighted by their exposure to Water Risk, as quantified by a proprietary methodology sponsored by TSC and designed by Anatase Ltd. Constituents with lower Water Risk are over-weighted while those with higher Water Risk are underweighted. The TSC Water Security Index® Family provides a liquid, investible underlying for investment products that offer high correlation to the equity markets while significantly reducing Water Footprint in order to advance responsible investing, and UN SDG 6 “Water Security” in global capital markets.
The outcome: the world’s first water security indices
After normalising and scaling the Refinitiv water data, TSC was able to design a suite of water security indices for the US and Eurozone with a global index planned for the second half of 2021:
1. The TSC US Water Security Index®
2. The TSC Euro Water Security Index® 3. The TSC Global Water Security Index®
Once water risk is quantified, it informs index constituent weightings. The company has also leveraged the digital platform of index administration innovators, Moorgate Benchmarks in London, so that global investors can access the indices in real time.
The bonus: lower carbon footprint
Discussions with a leading US asset manager for purposes of launching TSC Water Security UCITS discovered that an unexpected benefit of good water stewardship is a lower carbon footprint – which is logical when considering that companies who manage their water well also target better carbon efficiency. The TSC Water Security Indices carbon footprint is 49% lower in the Eurozone and 20% lower in the USA than their equity benchmarks.
Tapping into Refinitiv’s high-quality data, market-leading expertise and superior technology, TSC has sponsored a ground-breaking range of investable indices that helps advance the financial community by providing greater exposure to low-water-risk and lower carbon emissions thereby addressing SDG 6 (Clean Water) as well as SDG 13 (Climate Action).
The TSC Water Security Indices can be invaluable to a broad spectrum of financial professionals, used as the foundation of innovative financial instruments that meet global demand for responsible investment. Moreover, they can help clients gain a better understanding of climate and water risk.
Recognizing it will take alignment of all our organizations to scale impact globally, we invite you to join the movement as a Steward of Inclusive Capitalism. Together, the collective action of Council members will contribute to a fairer, more inclusive and sustainable future for all people and our planet.