573 financial institutions with assets of US$60 trillion are concerned about water risks, including mining corporations.
RENO (MINEWEB) – More than 70% of the western U.S. has been hit by drought, while China has been suffering from a national shortage of water and energy resources, prompting plans to develop 172 major water projects by 2020, says Paul Simpson of the CDP research firm working for institutional investors.
A survey by CDP of the world’s largest listed companies finds an increasing number of corporate executives say water is or soon will become a restraint on their corporate growth. In the CDP Global Water Report 2014, more than two-thirds of the Global 500 companies reported substantive water risks, “therefore investing to conserve, manage or obtain water has become crucial for some sectors,” said Simpson.
For instance, BHP Billiton has invested nearly US$2 billion “in a desalination plant in Chile to ensure adequate water is available for its desert mining operation,”’ he noted.
“Competition for scarce water resources is leading to business disruption, brand damage and the loss of the license to operate. A lack of water, or insufficient water of the right quality, can cut or even halt production,” observed the survey. “This is of growing concern to institutional investors as evidenced by investors’ support for CDP’s water programs.”
573 financial institutions with assets of US$60 trillion were signatories to the CDP 2013 water questionnaire dated Feb. 1, 2014.
“CDP investor signatories are essentially seeking the answer to one question: what shareholder value is put at risk by poor management of water exposures?” said the report. “They are concerned about potential impacts to the bottom line, and about the threats that poorly understood and managed water impacts pose to the future performance of their investments.”
The organization’s CEO Water Mandate defines water stress as having three core components: water availability; water quality; and water accessibility. “Compared to water scarcity, water stress is a broader concept as it considers several physical aspects related to water resources, including scarcity, but also water quality, environmental flows and the accessibility of water.”
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