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Water is a finite and shared resource. As well as being a basic human right and fundamental to healthy ecosystems, water is vital to the functioning of the global economy.
However, increasing demand and competition, climate change and pollution are putting pressure on global water resources, creating risks for business and society. This in turn generates risks and opportunities for investors.
Climate impacts and competition for water affect agriculture, the world’s largest user of water. Consequently, companies with direct operations and supply chains that are dependent on agriculture are exposed to water risks.
Those companies that appropriately mitigate these risks and demonstrate good water stewardship characteristics will create value for their shareholders.
While it is widely recognised that agriculture is the largest global user of water, supply of and demand for water by basin and crop vary considerably.
Companies with direct operations and supply chains that are dependent on agriculture, the world’s largest user of water, are exposed to water risks. Those companies that appropriately mitigate these risks and demonstrate good water stewardship characteristics will create value for their shareholders.
The PRI coordinated an engagement with investors representing nearly US$6 trillion to have global, listed companies better disclose and manage water risks in their agricultural supply chains.
Investors focused on the food, retail, beverage and textile sectors, which rely on agricultural inputs from water-scarce regions.
More information on the engagement and research conducted on agricultural supply chain water risk can be found here.
A summary of the results can be found here.
Global fresh water supplies have become increasingly exposed to risk as a result of both growing demand, and pressures on supply, including those linked to climate change.
Since 2015, the PRI has coordinated a collaborative engagement on water risks in agricultural supply chains. The engagement focused on these supply chains because agriculture is a major user of water, responsible for the withdrawal of 70% of the world’s freshwater.
In partnership with WWF, the PRI developed an engagement framework to facilitate investor dialogue with companies on managing their agricultural supply chain water risk.
This podcast explores how water, sanitation and hygiene (WASH) issues in company operations and supply chains affect investors and why investors should engage on the topic.