Caisse des Dépôts, Columbia Threadneedle and Union Investment are among 276 financial institutions to demand more information on water risks from their portfolio companies today.
The campaign, which is being spearheaded by environmental disclosure platform Carbon Disclosure Project (CDP), has been launched alongside a briefing aimed at educating the directors of financial institutions on the seriousness of water risk for financial performance.
The document has been written by Annabel Nelson, the former group head of sustainability strategy and policy for M&G.
It highlights the need for investors to better manage systemic water risks and price water into their investment decisions, saying that last year more than two-thirds (235/350) of financial institutions assessed were not monitoring their portfolio’s exposure to water.
Big tech and airlines being targeted
CDP’s campaign is targeting more than 1,000 companies that do not report fully on water. Only 463 companies made the list last year, marking a 122% increase in the number of firms being asked to provide data to the platform on the topic.
Names include major technology companies such as Apple, Amazon and Nokia, whose high water-consumption – driven chiefly by the use of data centres and chip manufacturing – is becoming a subject of growing public scrutiny.
Airlines like 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 have on water contamination.
CDP research estimates that water poses at least $225bn of risk to corporates.
The non-profit recently found 118 companies that have integrated water targets into the remuneration policies of their chief procurement officers, including big names like Coca-Cola, L’Oréal and Kao Corporation. But generally, it warned that water risk wasn’t being taken seriously enough by companies and financial institutions.
Possible new standards
The British Standards Institute (BSI) said earlier this year it was considering creating a new international standard “to address some of the barriers and gaps in the current water stewardship landscape” and to encourage companies to use water more responsibly.
The body, which has led the development of a number of green finance standards under the International Standards Organisation in recent years, said there was a need for a water standard that could be applied at entity-level, rather than focusing on specific sites or assets.
Drop in demand for forest data
CDP’s latest campaign showed there was a decrease in demand for data on forests in 2024, with investors targeting 373 companies, compared with 414 in 2023. The drop is likely to be driven by an increase in mandatory disclosures on the subject as deforestation-related regulation in the European Union and elsewhere kicks in.
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