Stockholm (NordSIP) – According to estimates cited by the OECD in 2018, achieving SDG 6, “Clear Water and Sanitation”, could require trebling global investment dedicated to this issue to approximately US$1.7 trillion. However, there is evidence to suggest that this only represents a small part of wider global financing needs for water infrastructure, which could be US$6.7 trillion by 2030 and US$22.6 trillion by 2050.
Thomas Schumann Capital (TSC) was created in 2011 to address these issues by investing in technologies that extract freshwater sources. Over the last 11 years the asset manager has been busy developing a (financial) water index, attempting to launch an associated fund and acquirig majority stakes in “water mining” projects in the arctic region. Now the impact investor is hoping to launch a fund to monetise these assets via water purchase agreements with entities in the public and the private sector.
Who is TSC?
TSC is an impact investor and asset manager specialising in water projects led by its eponymous founder. At the end of 2022, TSC owned and managed TSC Water Security Index, Project Greenland Inc, and Project Alaska.
The TSC Water Security Index was launched in 2017 as an index family that qualifies and quantifies water risk in equities, according to TSC. Project Greenland, aims to bring the high-quality freshwater contained in the polar icecaps to markets in the Middle East, Europe and North Africa. “Project Alaska is pendant in the U.S. and would to serve the U.S. West Coast, Mexico and Asia,” Thomas Schumann tells NordSIP. Both projects “are private ventures to harvest and transfer super premium freshwater to regions experiencing extreme freshwater shortages,” he adds.
TSC is one of the many founding signatories to CERES Valuing Water Finance Initiative, a new global investor-led effort to engage 72 companies with a high water footprint to value and act on water as a financial risk and drive the necessary large-scale change to better protect water systems. According to Schumann, TSC partnered with the UN on several “Water Action” commitments and was invited to intervene at the UN 2023 Water Conference Stakeholder Prep Meeting, October 2022 to speak on “Financing Global Water Security”.
How to Water Mine in the Artic
According to TSC’s founder, Project Greenland’s “Iceberg Management and Water Extraction Program identifies appropriate free-floating North Atlantic icebergs that are towed to an operational location in the west of Scotland where the ice and water are processed for further transportation to the ultimate MENA consumers.”
However, Schumann tells NordSIP that TSC is not yet harvesting and processing icebergs. “We are currently not employing these technologies. The current freshwater sources are lakes, fjords and glacier melt. Our partners acquired these rights from the respective governments in each territory. Royalties per liter/gallon are due to the governments for every liter/gallon harvested and sold.”
According to the asset manager, “the combined current total [amount of artic freshwater to be exploited] for Greenland for 20 years is 140 Trillion liters with the first partner (7 trillion liters exploration rights/year). Another Greenlandic partner has freshwater exploration rights of approx. 1 Trillion/year for 20 years. Depending on how many partners we work with the Greenland total amounts to 140-250 trillion liters combined exploration volume for 20 years. In Alaska the annual exploration volume is 2-8 billion gallons (not liters). This is approximately equal to 600 billion liters of freshwater.”
The TSC Water Security Fund
TSC, in partnership with the FARAD-Group, first announced the launch of the Water Security Fund on March 22nd, 2019, on FARAD-Group‘s new business-to-business (B2B) platform dedicated to sustainability – GreenEthica Business Unit. However, this launch was subsequently postponed, according to Thomas Schumann.
Now, TSC appears to be hoping to launch the fund again, TSC announced on March 26, 2023. The Thomas Schumann Water Security Fund is described as a SDG6 (Sustainable Management of Water)-aligned Luxembourg alternative (private) investment fund hoping to use the aforementioned assets to capitalise on rising global freshwater demand. The fund is available to qualified investors for a minimum US$10 million allocations and the founder points to a target close of US$500 million.
“The underlying assets will be freshwater sources, exploration rights in U.S. and Europe to be stewarded and responsibly-monetized with investment-grade corporates and governments in drought-stricken regions who are in need of insuring and augmenting their freshwater supply: UK, France, Spain, Italy, MENA, Mexico, Taiwan, Jamaica,” Schumann explains.
“The fund’s underlying super premium Arctic freshwater assets are being monetized through long-term Water Purchase Agreements (WAP) with corporates, nations and municipalities in drought-stricken regions that are in need of augmenting and insuring their freshwater supply,” TSC explains via a press release.
Are you Comfortable with Mining the Artic?
The idea of mining the artic for freshwater is, to my mind, previously unheard of. While it could possibly offer an innovative path to address SDG6, some investors may be uncomfortable with the logic of profiting from the melting polar caps caused by climate change.
Addressing this comment, Schumann argues “that both corporates and governments are ‘profiting’ from receiving super premium freshwater, freshwater that is melting into the oceans every single second at an unprecedented rate (520 trillion liters in 2019 alone), hence becoming forever unusable due to salinity. Without freshwater there is no profit for society, environment, and economy.”
“Any profits I personally earn will be recycled into impact projects that accelerate SDG 6, such as Global Water First, aligned with my global mission of advancing SDG 6 in public and private markets,” Schumann concludes