The issue of water scarcity demonstrates how much climate change is threatening the way we live. Business experts discuss investment in innovative solutions, plus a greater role for ESG data so corporations can measure their environmental impact and achieve sustainable practices in water management.
- Demand for water is growing at an unsustainable rate, with four billion people enduring water scarcity for at least one month out of every year.
- Opportunities exist for investment in technologies that can profoundly change the economics and efficiencies of water management.
- ESG data is a powerful tool for helping corporates to measure and identify sustainable practices in water management, including improving water efficiency.
The “Aquanomics: Water, Wall Street & Climate Change” event recently addressed the challenges and opportunities of the current water crisis.
The Reuters Breakingviews event, which was sponsored by Refinitiv and took place during Climate Week NYC 2019, involved leading experts in business, finance and philanthropy in a discussion on how best to approach the growing problem of water scarcity.
According to the United States Geological Survey, the average person uses 80-100 gallons of water per day. In addition, the average company uses over 198 million cubic meters of water annually — equivalent to 1.4 million Americans.
Furthermore, UNESCO warns that global water demand is expected to continue increasing at a similar rate until 2050, accounting for an increase of 20 percent to 30 percent above the current level of water use.
This level of growth is unsustainable.
Already, more than two billion people live in high water-stressed regions. Four billion people (almost two-thirds of the world’s population) endure severe water scarcity at least one month out of every year.
Time is running out to successfully address this problem. It is up to corporations like Refinitiv, along with other innovators in every industry, to contribute their expertise and resources to the solution.
Refinitiv is part of an ecosystem of change makers, sharing ideas and developments through a network of partners. At the Aquanomics event, we heard unique perspectives from players in many different industries and sectors that can inspire the business world.
Opportunities to drive water innovation abound.
Sustainable practices in industry
Keynote speaker Carlos Brito, CEO of Anheuser-Busch InBev, acknowledged that without water his products wouldn’t exist.
“No water — no beer,” he said. To keep a healthy water supply in production areas, Anheuser-Busch InBev partners with local communities to foster sustainable practices and troubleshoot environmental concerns as they arise.
This includes providing farmers with seeds for more sustainable crop varieties and modernizing irrigation systems.
Supporting more sustainable agriculture through education and financing increases farmers’ yields, minimizes the resources needed, and enhances local tax revenue, while reducing risk and increasing profits for corporations.
Reducing water consumption
Forward-thinking companies like Levi Strauss & Co and Procter & Gamble have steadily innovated to reduce water consumption in agricultural, manufacturing, and consumer use stages.
P&G developed a hair product for drought-stricken regions of the African market to help residents meet prohibitive water restrictions of 50 liters per person per day. While these products were originally developed for use in Africa, they will soon be rolled out for U.S. sales.
Clothes are another great example. The average pair of Levi 501 Jeans requires 1,000 gallons of water throughout its life cycle.
This includes water to grow the cotton, manufacture the product, and to keep it clean. Eighty percent of this water is used in the agricultural phase. Levi Strauss is committed to reducing this usage by exploring cottonized hemp, which requires one-third of the water.
Water management technologies
While climate change threatens the way we live, investment can provide means for solutions. Prospects for philanthropy, growth and sound investments are widely available.
With #water demand largely remaining unaffected by economic changes, water serves as a big growth and investment opportunity for investors. #ClimateWeekNYC #Aquanomics #Refinitiv pic.twitter.com/SdMJmZL6jn
— Refinitiv (@Refinitiv) September 24, 2019
Gary White, CEO and co-founder of Water.org and WaterEquity, said: “The big opportunity is that there’s a trillion-dollar price tag on this.
“The markets are ready to take that capital, provide an attractive return, and solve the crisis at all levels — not just investing in business and infrastructure, but in solutions from the bottom up.”
Jay Iyengar, Senior VP of Xylem, a global water technology provider, adds: “We think it’s the opportunity of a lifetime.
“Today, there are innovations and technologies that can profoundly change the economics and efficiencies of water management.”
Earlier this year, Xylem created a first-of-its-kind revolving US$800 million credit facility through a 12-bank syndicate. Participating borrowers who deliver on a commitment to sustainable practices benefit from lowered interest rates on loans.
A role for ESG data
Finding transparency in corporate water usage isn’t always easy. Successfully solving the challenge depends on raising awareness and setting quantifiable targets.
We are at the beginning of a fast learning curve for investors when it comes to measuring and analyzing water risks. #Aquanomics #ClimateWeekNYC pic.twitter.com/YHgfxFwpSu
— Refinitiv (@Refinitiv) September 24, 2019
Availability of Environmental, Social, and corporate governance (ESG) data is a powerful tool for measuring impact and locating opportunities for more sustainable practices. Refinitiv’s ESG data reflects that:
- Some 56 percent of companies have a water efficiency policy, but only 19 percent have water efficiency targets.
- Over 80 percent of companies do not have water efficiency targets, so water waste should remain a concern for corporations and investors alike.
- Companies are actively increasing water reporting. There has been a 25 percent increase in companies with water efficiency policies, with 34 percent more companies setting specific water efficiency targets.
Watch — Refinitiv ESG Data: A focus on water
Every drop of data counts
Aquanomics panelists agreed that data is a crucial tool for finding measurable ways to improve methods and standards.
Marc Robert, COO and Partner of Water Asset Management, stressed the necessity of future planning. “We’re looking at today, but we need to be looking at the next 30 or 40 years. This is not going away.
“We have to be thinking of mechanisms to transmit that risk and give clarity. That’s where data is important.”
Nevertheless, Robert adds, the challenge comes with a great opportunity for businesses to prosper and serve customers well.
“It is a fantastic opportunity that can dynamize so much economic potential. This is a business issue. You give people water, you give them opportunity, you solve their health issues — you give them life.”
Aquanomics: Water, Wall Street & Climate Change
Looking to add water-conscious companies to your portfolio? Contact us to discuss Refinitiv’s ESG data today.