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Should ethical investors dip into water stocks?

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Fernald: The low-hanging fruit is the water-efficiency side, where companies are focusing on technological developments to make improvements.

Brown: For example, Emerson Electric is a holding in the [Pax World Balanced] fund, and they provide uninterruptible power sources, surge protectors, which help the efficiency of wastewater-­treatment plants. So it keeps these plants running at a very efficient pace. Also companies that make valves and pumps, I think those are pretty exciting [and] probably the least of the controversial companies out there.

And water privatization?

Fernald: You have to tread very carefully and you have to keep close tabs on your investments. There are some high-profile NGO [nongovernmental organization] campaigns now on this very issue. And there have been some very-high-profile cases where companies have had to pull out or lost their contracts – the most famous one being Suez in Bolivia, after mass protests [about] raising the cost of water. South Africa is also going through a very similar conflict.

The issue is: Should private firms own people's water?

Brown: We really have to look at these companies: Are they more focused on profits rather than quality or service? We look at [environmental] violations. Mismanagement of that is an issue and that's something as an investor we have to focus on and make sure they're managing responsibly.

Any company that stands out?

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