By Dylan Waldhuetter, Director of Water Stewardship Solutions
Water risk hasn’t received the same attention as carbon emissions in sustainable investing, but if you’re not paying attention to water, you’re already behind. Droughts, floods, deteriorating infrastructure, poor water quality and more are materially impacting companies’ direct operations and supply chains across the globe. The changing climate will only accelerate the manifestation of these water risks.
“Besides climate change, I don’t think there’s a more important issue in terms of investing,” said Julie Gorte, senior vice president for sustainable investing at Impax Asset Management. “We’ve all seen companies take material hits because of drought. There’s hardly any place now where water is immaterial to an investment decision.”
Companies are good at monitoring, quantifying, and reporting on withdrawals and usage, but exposure and response to water risks and opportunities is trickier to measure. Businesses deal with a variety of risks related to water quality and quantity depending on how they use water and where their facilities and supply chains are located. While many companies have pledged their commitment to water and frameworks exist to adopt water stewardship practices at the site level, there is a critical execution gap between the two.