Norges Bank Investment Management is leading a consortium of more than 130 institutions globally in a disclosure project aimed at providing investors with a comprehensive assessment of the water risks of the companies they invest in.
The project being undertaken by the Carbon Disclosure Project (CDP) asks more than 300 of the largest global companies to report on water use and other water-related issues for the first time. It aims to increase the availability of high-quality business information and raise awareness of water-related risk.
The project is being supported by 137 financial institutions globally with a combined $16 trillion in assets, including Allianz Group, CalSTRS, HSBC, ING, Mitsubishi UFJ Financial Group and National Australia Bank, which have signed the request for information, asking companies to measure and disclose information on their water usage, the risks and opportunities in their own operations and supply chains, as well as water management and improvement plans.
The questionnaire results will be made available to investors that have requested disclosure and summarised in an annual report, the first of which will be produced in the last quarter of 2010.
Global head of ownership strategies at Norges Bank Investment Management, Anne Kvam, said by asking the right questions the risks relating to water can be better understood.
“Water is a key investment issue because it is fundamental to many businesses, and is threatened in many areas of the world. By asking the right questions we aim to establish a common framework for assessing water-related risk, as well as drive more sustainable use of water, which is important for our long-term investments.”
CDP is an independent not-for-profit organisation which gathers primary corporate climate change information from thousands of businesses around the world so that it can be incorporated into business and policy decision making.
Chief operating officer at CDP, Paul Simpson said much of the impact of climate change would be felt through water, and the process of measuring a company’s water use will highlight their ability to operate in a water-constrained world.
Companies within the global 500 that have been asked to report this year are in water-intensive sectors such as automotive, construction, electric utilities, fast-moving consumer goods, food and beverage, mining, oil and gas, and pharmaceuticals.