Water risk factors are already stranding assets throughout the coal, electric utilities, metals & mining, and oil & gas sectors. Water security is no longer a small, plant-level operational issue for companies, but has become a strategic question for senior management. The research – High & Dry : How water issues are stranding assets – shows how US$15.5 billion has been stranded, or is at risk.
The latest report of the CDP issued in partnership with Planet Tracker and commissioned by the Swiss Federal Office for the Environment (FOEN) entitled High & Dry : How water issues are stranding assets, focuses on four case studies taken from key sectors with high levels of water usage: oil & gas, electric utilities, coal, and metals & mining.
Water risk is already stranding assets across major sectors of the global economy
The case studies include the Keystone oil pipeline in Canada, the epicenter of recent environmental protests and legal battles; the Pascua-Lama gold mine straddling the border of Chile and Argentina; the controversial Carmichael coal mine, run by the Adani Group in Australia; and the Oyster Creek nuclear facility in the US.
“Changes in water regulations, high levels of pollution, and community opposition are all driving stranded assets.”CDP
The projects represent the tip of the iceberg as high-quality water supplies are growing scarce.
Financial institutions must move quickly to avoid the worst impacts of the water crisis
Financial institutions are exposed to these risks through shareholding and lending activities.
69% of listed equities, reporting via CDP, state that they are exposed to water risks that could generate a substantive change in their business. The analysis shows the top 20 financial firms have provided US$2.5 trillion in bond, loan, and equity financing to some of the world’s most water-impactful companies over the past decade.
But many institutions are still unaware of the problem, with 33% reporting not to be assessing the exposure of their activities to water issues.
1. Assess risks and impacts. Take advantage of new tools to identify risks at different levels: industrial, company, stock, and geographical factors all play a role.
2. Disclose data. Increasing the level of transparency is critical to understanding water risks. Many regulators are already creating mandatory disclosure requirements to address environmental crises. Get ahead of these rulings and disclose their own portfolio water risks and impacts.
3. Manage risks and impacts. Create an engagement strategy which communicates the need for companies to address the water crisis.Put pressure on portfolio companies to support enhanced water disclosures and measure the impact of this engagement.
The CDP report can be downloaded here.
How water issues are stranding assets