CDP, the global non-profit, recently released new data which reveals the huge risks and opportunities from tackling the water crisis.
US$2.3 trillion in commercial opportunities could be unlocked if the private sector acts on water security.
The data combines the self-reported financial value from a select group of 591 companies which have regularly reported to CDP between 2018 and 2022. The companies reporting commercial benefits include global brands such as Hewlett Packard, Mars, L’Oréal, and Nissan.
Water efficiency was the most commonly reported opportunity cropping up in almost every industry from retail to energy. In addition, companies cited opportunities in new products and services which could be worth an astonishing US$1.7 trillion. This was followed by new water-related markets worth US$328 billion, and improved resilience to extreme weather, an estimated cost saving of US$231 billion.
The data is being released for the first time during World Water Week, an annual conference to discuss solutions to the water crisis. The original analysis was conducted as part of the research for CDP’s Riding the Wave report published earlier this year.
Miriam Denis Le Seve, senior manager, water at CDP, said: “The private sector should be treating water as a precious and fragile resource full stop. But what this data tells us is that water security is also good for business, with financial opportunities each year running into the hundreds of billions of dollars. Company investments into valuing water will make a huge difference to tackling this crisis head-on. The right time to act on these opportunities is right now.”
Water issues are filtering through to corporate decision-making with data from 2022 alone showing plans to invest up to US$79 billion to reduce water risks. More companies are walking the walk with 58% in the 2022 dataset revealing that they are maintaining or reducing their water withdrawals, while 63% now undertake a water-related risk assessment. A further 83% reported engaging their value chains on these issues as well.
Carine Smith Ihenacho, chief governance and compliance officer at Norges Bank Investment Management, added: “This data shows the large financial opportunities that exist for companies that integrate water into their business strategies. We are encouraged to see that this is no longer just a question of risk, but of real value ready to be captured by companies in our portfolio.”
In a surprising result, 1,100 CEOs located around the world are now reporting to CDP that their annual performance reviews are tied to the achievement of water goals. This highlights how water security has finally moved from the boiler room to the boardroom. The challenge for these companies is to translate awareness into action, ensuring water security is central to future business decisions and strategies.
Some businesses are further behind on this journey with 12% of respondents in 2022 setting pollution targets monitored at the corporate level, while 8% had set water, sanitation and hygiene (WASH) targets.