On November 5, the Carbon Disclosure Project (CDP) published its fourth global annual report on Water.
The report presents water data provided by 174 companies listed on the FTSE Global 500 Equity index. According to the companies that reported to CDP Water, 68% report exposure to water risk could generate a substantive change in their business, operations or revenue. Twenty-two percent of the companies also anticipate that issues around water could limit the growth of their business. 573 institutional investors with $60 trillion in assets under management are currently backing the CDP Water Program, pressing companies for increased corporate accountability on water management through CDP.
Boston Common was invited to comment on the Global Water Report:
“If water scarcity prevails, companies could face constraints to growth,” says Constantina Bichta, manager, environmental, social and governance research at Boston Common Asset Management. “They may not be able to provide their core products and services, or may lose the ability to expand their business. As investors in these companies, this is something we are deeply concerned about. Companies with large supply chains also run the risk of finding themselves in conflict with communities over access to water issues, thus putting their license to operate at risk.”
Since the beginning of the year, Boston Common has launched a portfolio level water engagement targeting 22 core holdings, to ascertain how companies manage water risks at the operational and supply chain level and encourage their participation to the CDP Water Program. Companies tend to take a narrow view on water management, one that focuses on water savings and efficiency measures, while failing to assess water availability in supply chain and engage with community on shared water management issues.