New Ceres Report Identifies Seven Sectors Putting Global Freshwater Resources at Risk

April 11, 2022 /3BL Media/ - A new report released today by the sustainability nonprofit Ceres reveals how industry practices are driving five critical threats to global freshwater systems – groundwater depletion, metal contamination, plastic pollution, water diversion and transfer and eutrophication. The analysis also makes clear that 12 key industries within seven sectors – including frequent offenders like Food Products and Textiles and Apparel and others that are not typically top-of-mind, such as Pharmaceuticals and Semiconductors – stand out as the biggest contributors to these threats, undermining the functionality of global freshwater systems that underpin global economic and societal stability.

The Ceres report, The Global Assessment of Private Sector Impacts on Water (“Global Assessment”), released in partnership with the Valuing Water Initiative, a Dutch government program, provides valuable insights to institutional investors seeking to advance corporate adaptation and innovation to pressing systemic water and climate system threats. By focusing on and investing in these challenges today, companies can substantially reduce financial risks and bottom-line losses down the road. The assessment offers a practical set of recommendations for the private sector. It was developed in partnership with the Global Institute for Water Security (GIWS) at the University of Saskatchewan in Canada, which conducted the science-based research and analysis on the strong linkages between industries, their practices and threatened global water supplies.

The new report analyzes scientific literature to identify the critical sectors and industries – as well as key business practices – most significantly impacting freshwater. Through a comprehensive scientific evidence and literature review, the Global Assessment helps investors connect the dots as to how these damaging impacts pose long-term financial risks, especially as population growth and climate change dramatically impact the planet. The assessment evaluates industry impacts based on severity, such as the damage caused to water resources, and the systemic nature of those impacts. It also examines the extent to which damage is affecting accessibility of other water users regionally.

“Many of the world’s largest institutional investors have yet to consider the private sector’s impact on freshwater when making investment and engagement decisions,” said Kirsten James, senior program director of water at Ceres. “The Global Assessment of Private Sector Impacts on Water makes the extent of those impacts clear for investors and outlines which industries are causing the most harm – and have the most to lose – if improvements aren’t made. Investors have a critical role to play in spurring greater corporate engagement on water stewardship, and we hope this assessment is a useful tool to help them strategically focus their efforts.”

The Global Assessment comes as the latest report from the Intergovernmental Panel on Climate Change warns of how the world stands on the precipice of unavoidable and irreversible adverse impacts from rising temperatures. The climate crisis is directly impacting the global water cycle and the distribution and availability of freshwater around the world, acting as a threat to the existing water crisis.

Given there is more to learn about how the private sector can and must fully engage in finding and implementing solutions, the assessment offers detailed recommendations to help investors strategically focus engagements with the private sector and what they should expect from companies when it comes to global water threat adaptation and innovation, including via seven core actions:

1. Water quantity: Ensure practices do not negatively impact water availability
2. Water quality: Ensure corporate activities do not pollute local and regional water bodies
3. Ecosystem protection: Ensure business activities do not degrade natural ecosystems; help restore ecosystems the business depends on
4. Access to water and sanitation: Collaborate on efforts to support clean water access and sanitation in the communities in which the business operates and those it impacts
5. Business integration: Integrate water-related risks and opportunities into corporate governance and decision-making at all levels across the organization; disclose comprehensive water use across the corporate supply chain
6. Public policy engagement and water governance: Proactively support public policies and water governance structures that further sustainable water resource management
7. Multi-stakeholder collaboration: Build, engage and invest in industry and cross-industry efforts that challenge traditional business practices and encourage both research and system-level changes

“This report is the first of its kind to clearly establish the scientific case that industry activities are leading to severe and systemic impacts to freshwater resources,” said Jay Famiglietti, executive director of the Global Institute for Water Security at the University of Saskatchewan. “Our research clearly makes a case that industries – such as food production, energy production, textiles, and technology – must do better not only to protect the freshwater resources of our planet, but to remain competitive in the market.”

For more than a decade, Ceres has been building the scientific and financial case for investor water action via the Ceres Investor Water Hub, Ceres Investor Water Toolkit and, more recently, through preparations for the engagement phase of the Ceres Valuing Water Finance Initiative, which is set to be formally launched later this year. Ceres has partnered with the Government of Netherlands on an overall effort – Valuing Water Initiative -- to catalyze capital market leaders to address water risk as a financial risk.

Additional reaction:

• “Industry has much to lose from critical water risks, and how it responds to these intensifying issues will determine our economic, environmental and societal futures,” said Betty T. Yee, California State Controller. “The private sector must take concrete steps to address pressing water scarcity and quality issues, and the scientific case for action outlined in The Global Assessment highlights the urgency for financial institutions to engage with companies on water scarcity and quality issues.”

• “Changing how water is valued requires collective effort and the private sector is critical to action and progress,” said Iris Bijlsma, Lead, Valuing Water Initiative. “While some companies have made progress in addressing their water impacts, system-wide change is necessary to truly mitigate the water crisis's far-reaching financial risks.”

• “Threats to our environment not only pose risks to our communities and ecosystems, but they can have a harmful financial impact on institutional investors,” said Michael Frerichs, Illinois State Treasurer. “Investors have a direct interest ensuring that the companies in which they invest are managing water resources sustainably and not exposing their business to legal, regulatory and reputational risks that can harm shareholder value. This new report will help companies, investors and other stakeholders better pinpoint escalating risks, identify best practices and use that information to better protect all parties.”

• “The Global Assessment clearly demonstrates the severe and systemic nature of the impacts from industry on freshwater resources,” said Andrew Gray, Director, ESG & Stewardship, AustralianSuper. “This report provides investors with clear evidence on these impacts and highlights the potential financial risks they pose to investee companies and investment portfolios.”

• "Investors everywhere should take note of this report because it offers clear insights into how industries continue to exacerbate threats to global freshwater systems,” said Sophia Cheng, CIO of Cathay Financial Holdings and Chair of the Asia Investor Group on Climate Change. “These threats pose long-term financial risks that prudent investors must address in their portfolios, and this report offers tangible steps we can all take starting today.”

Upcoming investor engagements will encourage companies within the identified key industries in the assessment to make substantial progress on addressing their water impacts.

About Ceres

Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through our powerful networks and global collaborations of investors, companies and nonprofits, we drive action and inspire equitable market-based and policy solutions throughout the economy to build a just and sustainable future. For more information, visit ceres.org and follow @CeresNews.

About Global Institute for Water Security

The Global Institute for Water Security (GIWS) at the University of Saskatchewan is the top water resources research institute in Canada and one of the most advanced cold regions hydrology centers in the world. GIWS is dedicated to helping protect precious freshwater resources needed for the world's growing demand for sustainable food production, mitigating the risk of water-related disasters such as floods, droughts, and fires, predicting and forecasting extreme global change through the use of advanced remote sensing and modelling techniques, and co-creating traditional knowledge with western science to empower Indigenous communities in protecting water health. www.water.usask.ca.

About 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.