A turning tide: Investor demand for data on corporate water risks more than doubles in a year

LONDON, UNITED KINGDOM, June 25, 2024 /EINPresswire.com/ -- A turning tide: Investor demand for data on corporate water risks more than doubles in a year

• CDP’s annual Non-Disclosure Campaign (NDC) sees a 122% increase in number of high-impact businesses requested to disclose water-related data

• 276 financial institutions representing over US$21 trillion in assets, including Cathay Financial Holdings, Columbia Threadneedle Investments, Union Investment and Caisse des Dépôts, join campaign call for increased disclosure

• Tech giants including Apple, Amazon, LG and Roku, and aviation companies Qantas Airways, Ryanair, Jetblue and easyJet, among companies requested

• Campaign launched alongside new report urging Directors to step up action to address systemic exposure to water-related risks for businesses and portfolios

The tide may be turning for financial markets to measure water risks in their portfolios, as more than double the number of large businesses are urged today by a $21 trillion-strong group of 276 global investors, banks and insurers, to disclose data for the first time through CDP's Non-Disclosure Campaign.

A record 1,029 high-impact companies are being specifically requested by these financial institutions to report data on their water-related impacts and risks – marking a 122% increase on requests in the previous year.

Among those requested are major technology companies Apple, Amazon, Nokia, LG, and Roku, whose water exposure often lies in high consumption in data centres and chip manufacturing. Airlines including Qantas Airways, Ryanair, Jetblue, WizzAir, and easyJet are also asked to disclose water impact data as contamination from jet fuel leakage and extensive use of de-icing fluids spark concerns over the industry’s exposure to water risks.

The campaign specifically engages a select group of companies that have not previously reported environmental data to financial institutions through CDP – the not-for-profit that runs the world’s only independent disclosure system.

The campaign is a proven way to scale availability of environmental data, as businesses are more than twice as likely to disclose through CDP when engaged directly this way. Major businesses like BMW successfully disclosed on water impacts last year, alongside first-time disclosers Equinix and Hugo Boss.

The 100+ financial institutions requesting water-related data in this year’s NDC point to a growing awareness of the potential financial, social and reputational risks associated with water, and how these may leave portfolios exposed. Previous CDP research, for example, has estimated a minimum of $225 billion in corporate water-related risks.

The help address that, today’s NDC campaign launches alongside a new CDP brief, ‘Navigating Troubled Waters: A Briefing for Directors of Financial Institutions’. The brief highlights the need for financial institutions to better manage systemic water risks, and fully price water into their financial risk assumptions. It outlines four important mechanisms that directors must take to address these risks, including fully embedding water considerations in strategy; assessing water risks and opportunities; leveraging their influence for sustainable water management; and pushing for comprehensive water-related data disclosure.

Claire Elsdon, Director of Capital Markets at CDP remarked: “CDP’s Non-Disclosure campaign offers a powerful mechanism for financial institutions to intensify their ask for company disclosures. We have seen a significant increase in financial institutions leading the demand for greater transparency on water-related risks in their portfolios. Now we need to see companies responding by reporting this information and working in partnership with the finance community to measure and manage these risks. To support boards of directors in this important risk management exercise, our brief illustrates how transparency, accountability, engagement, and stewardship are vital mechanisms through which financial institutions can safeguard their portfolios and reduce systemic water risks across financial markets. The magnitude and complexity of the water crisis is vast, but guided by more complete data, directors are well-placed to meet the challenge ahead-on."

In addition to businesses engaged on water, the campaign also aims to improve data availability on climate and forests. 1,998 companies overall, collectively responsible for emissions equivalent to those of India, Brazil, Germany and the United Kingdom combined, are being asked to disclose.1 CDP has launched a new, integrated questionnaire in 2024 to support companies in tackling these environmental impacts holistically.

Sophia Cheng, Chief Investment Officer, Cathay Financial Holdings: “Cathay has been participating in the CDP Non-Disclosure Campaign since 2017. Water resource challenges pose significant risks to global food security, biodiversity, human health, and economic stability. By participating in the CDP Non-Disclosure Campaign, Cathay Financial Holdings gains valuable insights to better manage these risks within our portfolio. We also leverage the CDP questionnaires to urge our investees to strengthen their actions on water resource management and transparency. Through this initiative, we aim to encourage investee companies to strengthen their water resource management and take proactive actions to address these pressing concerns, thereby fostering greater sustainability and resilience across our investments.”

Footnote 1: Source: https://ourworldindata.org/grapher/annual-co2-emissions-per-country?country=USA~GBR~IND~CHN~FRA~DEU~BRA~European+Union+%2828%29~JPN~CAN

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Notes to editor

For more information, or exclusive interviews, please contact:
• Toyosi Adebayo | Associate Director Communications, Capital Markets | [email protected]

About CDP

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 700 financial institutions with over $142 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 24,000 organizations around the world disclosed data through CDP in 2023, with more than 23,000 companies – including listed companies worth two thirds global market capitalization - and over 1,100 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.

[email protected]
Toyosi Adebayo
C D P