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Investors warn about water risk as financial institutions demand more information | News
Caisse des Dépôts, Columbia Threadneedle and Union Investment are among the 276 financial institutions today demanding more information about the water risks of their portfolio companies.
The campaign, led by environmental disclosure platform Carbon Disclosure Project (CDP), was launched alongside a briefing aimed at educating directors of financial institutions about the seriousness of water risk to financial performance.
The document was written by Annabel Nelson, former head of M&G’s sustainability strategy and policy group.
It highlights the need for investors to better manage systemic water risks and define the price of water in their investment decisions, stating that last year more than two thirds (235/350) of the financial institutions assessed did not monitor their portfolio’s exposure to water.
Big tech companies and airlines being targeted
The CDP campaign targets more than 1,000 companies that do not disclose full water reports. Only 463 companies made the list last year, marking a 122% increase in the number of companies asked to provide data to the platform on the topic.
The names include major technology companies such as Apple, Amazon and Nokia, whose high water consumption – driven mainly by the use of data centers and chip manufacturing – is becoming the subject of increasing public scrutiny.
Airlines such as Qantas, Ryanair, Jetblue and Easyjet are being asked to disclose their impacts on water, as awareness grows about the role that jet fuel leaks and the extensive use of de-icing fluids can play in water contamination. water.
CDP research estimates that water poses at least $225 billion of risk to companies.
The nonprofit recently found 118 companies that have integrated water targets into their chief purchasing officers’ compensation policies, including big names like Coca-Cola, L’Oréal and Kao Corporation. But, in general, he warned that water risk was not being taken seriously enough by companies and financial institutions.
Possible new standards
The British Standards Institute (BSI) said earlier this year that it was considering creating a new international standard “to address some of the barriers and gaps in the current water management landscape” and to encourage companies to use water in a sustainable way. more responsible.
The body, which has led the development of a series of green finance standards under the International Organization for Standardization in recent years, said there was a need for a water standard that could be applied at an entity level, rather than focusing on locations. or specific assets. .
Drop in demand for forest data
CDP’s latest campaign showed that there has been a decrease in demand for forest data in 2024, with investors targeting 373 companies, compared to 414 in 2023. The drop is likely to be driven by an increase in mandatory disclosures on the subject, as regulations related to deforestation in the European Union and elsewhere come into play.
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