Water, it is said, is everyone’s business. Yet most of the world’s largest institutional investors are unaware of the widespread impacts of private sector activities on freshwater, and the degree to which certain corporate practices are both severe and systemic in nature. There is also currently little to no pressure or competitive advantage for companies to address water stress in the regions they operate in. While such pressure and advantage can be created by governments, often these efforts are too small and too local. Many companies are now so big that there is no one single government that can influence or incentivise their transformation.
Institutional investors and commercial banks have the power to drive corporate action, but are not aware or not integrating water risks into investment decisions. It doesn’t help that the way the water problem is communicated is too technical, complex and that the asks from investors are scattered. This fails to alarm or inspire private financiers to act.
Our Finance Journey
We focus on institutional investors and commercial banks who can exert considerable influence over investment and management decisions as a positive stakeholder for water. Our hope is that this will lay the groundwork for large-scale efforts to drive systemic change throughout the capital markets towards the goal of realizing SDG6: ensure availability and sustainable management of water and sanitation for all.
Working with our partners we are creating:
The Valuing Water Finance Taskforce
The Valuing Water Finance Taskforce helps drive corporate action on water-related financial risks and engages corporate leaders on sustainable water practices and water risk. The Taskforce raises awareness within the capital markets of the widespread negative impacts of corporate practices on water supplies, as well as to clarify which industries and practices are linked to the most severe and systemic of these impacts. Ceres, together with the Task Force members, will strengthen the financial case for corporate water leadership.
Valuing Water Expectations for Companies
In order to safeguard water resources by preventing the crossing of dangerous ecosystem thresholds or points-of-no-return, investors need to coalesce around a straightforward set of expectations. We will use the Valuing Water Principles to create compelling, easily-communicated and investor-backed expectations for companies so they cannot use complexity to evade responsibility. This will demonstrate how addressing water security builds resilience in investment portfolios and systemically change how financiers contribute to this sector.
Water-related disclosure framework
We will develop and implement a new water-related disclosure framework for financial institutions, beyond the existing Task Force for Climate Related Financial Disclosure (TCFD) recommendations, to ensure investment, insurance, lending, rating and underwriting practices are aligned to help create a water secure future for all. This follows a key recommendation from the United Nations High-Level Panel on Water for financial institutions to improve the disclosure of their investments’ exposure to water-related risks and how their investments may contribute to or mitigate water-related these risks. Using these disclosures, we will score and rank financiers, enabling us to publish benchmarks and highlight best practices, promote leaders and boost ambition amongst laggards. In this way, we aim to introduce new forms of accountability and accelerate action in financial institution towards water-smart financial practices.