From the severely low water levels on the drought-stricken Colorado River in the United States to the dwindling Rhine River in Germany, global water stress is a phenomenon that threatens agricultural and barge traffic.
Why Global Water Crisis is a Financial Issue
To raise water risk as a financial issue, Ceres, an environmental shareholder advocacy organization, and a group of institutional investors on Tuesday launched the Valuing Water Finance Initiative to encourage the largest corporate water consumers and polluters to improve their water stewardship.
There are no businesses that can survive without water. Additionally, there is no humanity that can thrive without water. Mindy Lubber, CEO and president of Ceres, stated that all industries around the world are facing the effects of the expanding global water problem, which is being exacerbated by the escalating climate disaster.
Included in the global network of 64 founding asset owners and asset managers with $9.8 trillion in assets under management are California State Teachers’ Retirement System (Calstrs), California Public Employees’ Retirement System (Calpers), Fidelity International, and Franklin Templeton.
Kirsten James, senior program director for water at Ceres, stated that the investors who have joined the initiative are poised to engage with portfolio companies around corporate expectations for valuing water and to assist the private sector in valuing and acting on the water as a financial risk and driving the required large-scale change to better protect water systems.
The program will first target 72 businesses from four industries: food, beverage, apparel, and high technology.
James explained that the list was compiled using a system that assessed industries with the biggest impact on water quality and security, as well as organizations within those sectors with a large water footprint. Investors will meet companies at the point in their voyage where they are currently afloat. Some on the list are considerably further along than others, she explained. Investors will seek a deeper understanding of the firms’ water stewardship concerns and will collaborate to find solutions
The effort targets six actions: water quantity, water quality, environmental protection, access to water and sanitation, board oversight, and engagement in public policy.
Global water risk is a major, unreported financial risk for investors, particularly in high-water-use industries like energy, agriculture, and industry, said James Rees, chief impact officer of Botanical Water Technologies. Many boards have been preoccupied with carbon reporting while overlooking a factor that can have direct effects on business continuity and profit.
Water risk is a growing problem for many businesses in thirsty industries, including the automotive manufacturing sector. Tesla (NASDAQ:TSLA) , the manufacturer of electric vehicles, recently announced that 63.7% of its independent shareholders voted in favor of a water risk reduction proposal submitted by the non-profit organization As You Sow.
The resolution requests that Tesla (NASDAQ:TSLA) address the global water risk posed by climate change at its manufacturing facilities and throughout its supply chains. Due to drought, diminishing groundwater levels, and conflicting water needs, obtaining water resources is becoming increasingly difficult and laden with risk, said Danielle Fugere, president and chief counsel of As You Sow. With this proposal, shareholders are requesting measurable information from Tesla (NASDAQ:TSLA) regarding the unique risks associated with the water-constrained locations in which the company operates.
Featured Image: Megapixl @Ipopba
