Читать книгу ESG Investing For Dummies - Brendan Bradley - Страница 64

The world is facing a global water crisis! However, while the world has increasingly recognized the significance of environmental sustainability, there is less focus on the forthcoming water crisis. This lack of urgency can be attributed to the fact that the water crisis isn’t seen as a global crisis — in the way that climate change is seen as a shared and global problem — but rather a group of local ones. Moreover, observers fail to differentiate between the interdependent facets of the water crisis — namely, water access, pollution, and scarcity.

However, there are some positive signs that organizations, such as the United Nations, are better defining and evaluating impact companies in the water and sanitation sectors. To move further forward, global cooperation among distinct stakeholders is required to appreciate that water issues in one area impact economies in other areas, especially where they contribute to disruptive conflict, and companies can’t ignore local problems when they impact global supply chains. Public-private partnerships are required to address these issues, but they need access to precise data and information; otherwise, the wider economy will suffer from resource reduction and a company’s results will be vulnerable to stakeholder criticism caused by a negative reputation.

Water is in focus in Europe, where the vast majority of investors see it as a concern, but perhaps this is driven by the establishment of the European Union (EU) Water Framework Directive. In addition, the World Economic Forum (WEF) has cited water as a driver of global risk, for everything from conflict to health crises and mass migration. And note that water security is one of the United Nations’ Sustainable Development Goals (see Chapter 1). Therefore, water is considered a multi-impact investment because it affects the microclimate, food supply, industrial chain, health, productivity, and the environment overall. This confirms that water is fundamentally linked to other impact themes and has wide applicability to business and the investment community. Water management, technology, distribution, and conservation are some of the issues that organizations face, following years of poor water and waste management practices.

There is increasing pressure for water-themed investments given the huge number of people who lack access to securely managed sanitation and drinking water services. Meanwhile, water-related perils are responsible for 90 percent of natural disasters. However, most firms still lack a water-efficiency policy, and even fewer of them have set targets for water efficiency. The only bright spot is that the momentum appears to be building and institutional investors have noticed, as water now ranks among their top three ESG concerns. Stock index providers are designing more sustainable indexes that explicitly cover water and sanitation companies, while analysis of some of the major global indexes by Ceres (www.ceres.org/) found that 50 percent of component companies face medium to high water risks.