VWI launches Finance Action Pathway at UN 2023 Water Conference

31 March 2023, United Nations, New York – The Valuing Water Initiative launched the Finance Water Action Pathway (“the Pathway”) in partnership with CDPWater Footprint NetworkOECD – OCDE  at the UN 2023 Water Conference. The Finance Water Action Pathway uses the combined expertise of partners in the fields of environmental disclosure, financial regulation and governance, water footprinting and water security to define clear actions that financial institutions and other actors need to take to transform private lending, funding and investing and drive the transition to a water-secure world.

C ommenting on the announcement, Cate Lamb, CDP’s global director of water security said “The flow of trillions of dollars’ worth of private capital will make or break our ability to achieve a water-secure future. This new Pathway will support the financial sector on its journey to valuing water as a precious and fragile commodity. We urge all financial institutions, and those enabling them such as stock exchanges, credit rating agencies and ministries of finance, to engage with this work and take the first step towards seizing water-related opportunities and mitigating risks and impacts across the economy.”

Water, as an inseparable part of nature and economic stability, is an essential resource that needs to be considered by financial institutions (FIs) when making decisions about their financed activities. FIs have the power to influence or incentivize the transformation of whole sectors in ways that single governments cannot. There are two main avenues through which FIs can shape the future and drive the transition to a water secure world:

  • Mobilizing capital and scaling up: financing the water sector by investing in water infrastructure, water technology, sanitation services, data and monitoring systems, and other water-related projects necessary to supply and treat water for farmers, industries and households.
  • Reducing water-related impacts, dependencies and risks of financial beneficiaries by undertaking water-related due diligence and establishing and reporting water-related targets and covenants across all lending, investment, insurance and underwriting activities across multiple sectors.

As there are already a number of dedicated work streams and global endeavours to mobilize and scale up capital, the Pathway focuses on reducing water-related impacts, dependencies and risks. The Pathway is aligned with the UN’s Climate Action Pathway for Finance and thus consists of the following:

  • Vision statement of how the sector should look in 2030.
  • System transformation overview outlining the areas that can drive the transformation (levers of change) and the key actors and the role they can play.
  • Actions and milestones for each actor that are specific, practical and science informed.
  • Progress that has already been made towards the goal.

The Pathway will continue to be developed with clear, vetted and timebound guidelines for all of the involved actors after further consultations with the financial sector and other relevant stakeholders.

The global water crisis is a systematic financial risk to nearly all economies and the climate crisis multiplies these threats. 2.3 billion people currently live in water stressed areas, and since 1970, we have experienced a dramatic 84% decline in freshwater biodiversity.

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