Green Infrastructure: Pollution Control

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 areas: green transportation, green 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 TRASAR^TM 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)

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.

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