The Valuing Water Initiative announces partnership with CDP, Mercer and the Water Footprint Network to accelerate water-related transparency and action for the financial sector
The Hague, Netherlands, 4 August 2021 – The Valuing Water Initiative today announced a new partnership with CDP, Mercer and the Water Footprint network to develop and implement a new water-related disclosure framework for financial institutions. This will enable financial institutions to align their investment, insurance, lending, and underwriting practices to a water-secure future for all.
T his follows a key recommendation from the United Nations High-Level Panel on Water for financial institutions to improve transparency around their exposure, directly and through their business activities, to water-related risks and opportunities. Members of the Network of Central Banks and Supervisors for Greening the Financial System and the European Central Bank also recently acknowledged the need for financial institutions to disclose water-related data.
The World Economic Forum consistently ranks water crises in its top 5 global risks by impact, while CDP reported maximum financial impacts of water risks at US$301 billion – five times higher than the cost of addressing them (US$55 billion). Climate change will only increase these risks since its impacts on societies and economies are often felt most acutely through water.
Commenting on today’s announcement, Ambika Jindal, Lead of the Valuing Water Initiative, said: “With its financial power, the banking sector is a vital ally in bringing improvements to water management. While there is some way to go, more financial institutions are recognising their role in investing in the future of water, and divesting from industries that threaten it. We are delighted to be funding this important work that will help establish the architecture required to underpin a permanent transformation and the systemic change that is needed in the ways the financial sector values water.”
Cate Lamb, Global Director of Water Security at CDP, commented: “For over 20 years, CDP has worked with financial institutions, a sector that plays a critical role in the transition to a sustainable world, to achieve our vision of a thriving economy that works for people and the planet in the long term. With freshwater biodiversity suffering a catastrophic 84% decline since 1970, now more than ever, there is an urgent need to accelerate action and mainstream disclosure of water-related impacts amongst this powerful sector. This partnership allows us to enhance the quality and quantity of environmental data available to the market. It builds on the growing momentum in the financial sector to better understand environmental inter-linkages and will enable them to act as a key driving force behind the transition to a water-secure, sustainable world.”
Monika Freyman, Head of Sustainable Investment for Mercer in Canada and lead of the Mercer project on water commented: “We are delighted to be a part of this new project. Water risk is under-priced and in general investors are not taking this into account when making their investment strategy, manager selection and monitoring decisions. Mercer will be undertaking a survey and research on what actions asset owners and asset managers should and could be taking in relation to water. This will help determine the methods and data gaps that exist so that financial institutions appreciate and understand water risks as well as the value of sustainable, resilient water systems.”
Dr Rick Hogeboom, Executive Director of the Water Footprint Network said: “While companies across industries have been gradually building understanding of their water impact and water dependency through corporate water footprint assessments, financial institutions are only just now beginning to recognize the role they can and have to play in the water domain. Our first survey of Dutch banks, insurers and pension funds three years ago revealed that there is still much to be done by the financial services sector to ensure water sustainable investment practices and to truly value water. We trust that this project, in which we will work closely with our partner organization Water Footprint Implementation, will provide the necessary guidance for IFI’s to take proper water action.”
The metrics developed as part of the disclosure framework will be embedded within CDP’s global reporting mechanism to establish the foundations for the long-term, permanent architecture required to activate the financial sector to value water and drive systemic change across the real economy. In addition, a scoring methodology will be deployed, by the Water Footprint Network, on a limited basis to enable annual benchmarking to highlight best practice, promote leaders and boost ambition amongst the laggards. Vitally, all of the data CDP collects from its framework will be made available to mainstream ESG data service providers and credit rating agencies for use in their own products and services. It is hoped this will serve to further normalise the integration and value of water into financial decision making.
The creation of a water-related disclosure framework for financial institutions was instigated by the Valuing Water Initiative as part of its Finance Journey to encourage institutional investors and commercial banks to drive corporate action to integrate water considerations into investment decisions.
CDP, which runs the global environmental disclosure system, is expanding its work to accelerate the protection and restoration of nature. This partnership will aim to ‘move the needle’ on this work by enabling the integration of water-related data into investment and business decision making globally.
Notes to Editors
About the Valuing Water Initiative
The Valuing Water Initiative (VWI) calls for water to be prioritised in decision making to ensure we can live in a sustainable water-secure world. VWI uses practical case studies to showcase the implementation of the United Nations Valuing Water Principles in order to bring systemic change in the way water is valued in policy, practice, finance and behaviour and to inspire others to do the same. VWI was launched at the World Economic Forum in January 2019 by Dutch Prime Minister Mark Rutte. For more information please go to www.valuingwaterinitiative.org and follow us on Twitter, LinkedIn, Instagram and Facebook.
CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions. Founded in 2000 and working with more than 590 investors with over $110 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests. Over 10,000 organizations around the world disclosed data through CDP in 2020, including more than 9,600 companies worth over 50% of global market capitalization, and over 940 cities, states and regions. Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy. CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative. Visit cdp.net or follow us @CDP to find out more.
Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 76,000 colleagues and annual revenue of $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.
About the Water Footprint Network
Founded as a non-profit multi-stakeholder global network, the Water Footprint Network is a knowledge platform for collaboration and exchange between academics, companies, organizations and individuals to solve the world’s water crises. Our mission is to promote the transition toward sustainable, fair and efficient use of fresh water resources worldwide, so as to sustain thriving communities and nature’s diversity. We use the water footprint concept as the science-based, practical tool of choice, around which we build our awareness raising campaigns, capacity building programs and knowledge dissemination activities. Visit waterfootprint.org or follow us @WaterFootprintN to find out more.