Water Investment: Risks And Opportunities

GENEVA, Switzerland

A new WWF report calls on financial institutions to start valuing water and taking steps to mitigate worsening water risks to their investments.

"Freshwater risks & opportunities: an overview and call to action for the financial sector", launched in November, also highlights the opportunities for financial institutions to rapidly scale up investments in tackling water challenges, which can generate strong returns, while simultaneously benefitting both people and planet.

“With the economic and financial cost of floods, droughts and other water risks increasing, financial institutions need to take water challenges far more seriously than they have so far,” said Alexis Morgan, WWF Water Stewardship Lead and author of the report. “The financial world must urgently start assessing risks to their portfolios, while also requiring companies to actively mitigate their water risks.”

For the past nine years, the World Economic Forum has ranked water crises in its top 5 global risks by impact, while the Carbon Disclosure Project (CDP) reported corporate losses of over $30 billion USD due to water risks in 2018 alone. From the droughts that materially impacted Europe’s economy to the multi-million dollar impacts of water scarcity in cities like Cape Town and Chennai, water risks are increasingly impacting companies and investors around the globe.

Climate change will only increase the risks since its impacts on societies and economies will primarily and most acutely be felt through water.

“Water is not just about risk, it also represents significant opportunities for investors from the multi-trillion dollar water infrastructure financing gap to new services and products – opportunities that are only likely to grow in the coming decades,” said Morgan.

Along with assessing and valuing water risk, the report calls on financial institutions to mobilize finance to shift business practices, request improvements to the way in which water is handled by Environmental, social and governance (ESG) data providers and urge regulators to strengthen water-related disclosure requirements.

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