Blog.Mar 24, 2017

The financial relevance of water

The financial relevance of water was the theme of a seminar last week, meant to kick off a new forum shaped by the participants. The forum is led by SIWI together with SWESIF and CDP.

SWESIF is an independent association that has its purpose in sustainable investment and represents approximately 55 members, most of whom are asset owners and asset managers. CDP is a non-profit organization that runs a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.

“Thirsty businesses: Why water is vital to climate action” is a report produced by CDP, with data collected from 607 companies (out of 1,252 requested) in high-risk sectors. The CDP has divided financial water risks into three main categories; physical, regulatory and reputational, and identified financial consequences like increased capital expense, lower revenues, increased operating costs and decreased shareholder value.

The discussion on how to work towards the sustainable development goals (SDGs) by including water risks in dialogue with companies though the supply chain, was active and interesting, with input and innovative ideas from both the private and public sector. The main points of discussion was:

  • The lack of transparency in how companies work with water risks
  • The need for an index or database where investors can compare companies to a water risk baseline.
  • The variation in water risks between different geo-locations that make it a lot more complicated to work with than carbon emissions.
  • What kind of investments that are relevant and long-term, and how to choose what companies to have a dialogue with.
  • With water scarcity increasingly becoming a problem in parts of Sweden, does the private sector pay enough for services provided by the state, like water and roads?

This meeting was the first in a series of workshops and seminars that will be shaped by the needs and interests of the participants around the topic of water as a financial risk.