BY ANTONY CURRIE

Environmental-activist investors would do well to dive into a new risk pool. Big institutional shareholders have recently persuaded the likes of Glencore, Shell, BP and Equinor to up their game on assessing, reporting and even reducing the risks to their business from global warming. It’s time these investors focus their growing heft on water.

The business of treating and moving water requires a lot of power. In the Australian state of Victoria, water services are responsible for a quarter of greenhouse-gas emissions, with half of that used to keep supplies flowing in Melbourne. In California, where the industry accounts for 20% of energy use, water-conservation efforts earlier this decade reduced power consumption by more than the combined energy-efficiency programs of all investor-owned utilities. It’s hardly a stretch for stock- and bondholders to apply some pressure to the biggest water-sector carbon polluters.

Companies, too, need a kick from their owners to address the business risks from either too little or too much water. Many simply ignore it, or don’t talk about it. Climate-disclosure activist CDP received replies from more than 2,100 corporations to its most recent survey. That’s a 50% improvement in just two years, but even so, just two-fifths of the companies it contacted responded.

Even the information CDP gets sometimes fails to impress. Head of water security Cate Lamb told the audience at World Water Week in Stockholm last week that companies often set meaningless targets, or highlight weak or unsubstantiated efforts on water stewardship.

There’s also a growing sense among some conference-goers that some of the more proactive companies have started resting on their laurels. One attendee at CEO Water Mandate, an association of some 160 businesses that also convened in Stockholm, berated members for too often addressing water issues only in their own facilities and ignoring the broader regional risks.

There’s a lot at stake. U.S. defense company Raytheon, for example, last year told CDP that up to a fifth of its global revenue would be at stake if the flow of the Colorado River basin continues to deteriorate. That’s some rare honesty that investor activism can try to elicit elsewhere.

First published Sept. 3, 2019

IMAGE: REUTERS/Michaela Rehle