Friday, April 6, 2012

Water Scarcity is the New Global Warming

The global director of water stewardship for Coca-Cola Co. says that water risk isn’t imminent; it’s already manifest.

Greg Koch, who spoke at the Financial Times sustainability conference in New York City on Thursday, issued dire warnings and a call to arms for investors and corporations around the world along with governments.

And he wasn’t alone.

Robert Hormats, Undersecretary of State for Economics, Energy and the Environment says disputes or outright water wars are imminent in the near future.

Here’s why: an increasing population with needs for more energy and food is putting undue demand on the world’s water supply. So much so that by 2025 some two-thirds of the world’s population will experience some type of water shortage, according to myriad estimates.

Water scarcity is even deemed the most immediate environmental risk to the world, according to Usha Rao-Monari, the global head of water, global infrastructure and natural resources for the International Finance Corporation.

There are two sorts of water risks, she says: physical risk, which is not having enough water at the source, and economic risk, which is the cost of moving water around.

Both are extreme and being experienced throughout the world right now.
In terms of solutions, Rao-Monari sees three: financial, innovation, and government policy.

Each of these can play a critical role in water quality and delivery.

Not long ago, climate change and carbon emissions were the environmental demons knocking at our doors. The Carbon Disclosure Project sprung up out of this threat to measure, disclosure and share information among companies. Now it’s water.

The CDP also has a growing water initiative where companies report their water policies. The CDP Water Disclosure Global Report 2011 finds that 57% of the 190 publicly listed organizations that participated in the survey report board-level oversight of water policies, strategies, or plans. By comparison, a report released by CDP in September 2011 showed that 94% of Global 500 companies report board-level oversight of climate change, suggesting that corporate understanding of water as a business concern trails that of climate change.

To enhance investor analysis of corporate water risk and to support corporate action on water stewardship, CERES, the Boston-based coalition of environmental organizations and corporations, developed a go-to water gauge. Backed by investors managing over $2 trillion in assets, the “Aqua Gauge” provides a benchmark for best practice and enables investors to assess, scorecard and compare companies on their management of water risk.


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