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The prosperity required to pay pensions relies on people —and the planet. Climate change has put the planet on investor agendas, and although carbon has taken priority to date, water needs to be next.
For the past five years, the World Economic Forum Global Risks Report has included “water crises” as a top five global risk in terms of impact in the next 10 years. In 2017, four of the five top risks are all connected to water.
The most energy-intensive industry sectors are also the most water-intensive. The prosperity that has relied on the fuel tanks is now relying on the water tank.
Water scarcity (too little water) and, at the other extreme, storms and flooding (too much water), are not always caused by climate change, but such events will only increase as the temperature rises.
Also, in their annual financial statements, most of the companies currently fail to disclose explicit water impacts; that is, specifically attributing water-related issues to lost production capacity or additional cost to secure fresh water to treat waste water.
At the other extreme, too much water, delivered by severe weather events and flooding, creates a different set of issues for investors. The incidents such as hurricanes, destructive storms, river floods - causing evacuations, lost power and damaged infrastructure – can have the economic impacts that last long after the headlines and flood waters have subsided.
Investors must seek out and apply the new tools that are increasingly becoming available to assess and reduce risk, and exploit new opportunities creates by the disruption to the status quo.
To learn more read the full article Connecting the Fuel Tank and the Water Tank.
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