By Reuters
January 7 – When it comes to corporate exposure to nature risk, water has to be the most salient. Agriculture uses 70% of the world’s freshwater, opens new tab, but it is also critically important to sectors ranging from textiles to pharmaceuticals and semiconductors.
For many years companies took for granted that water would be available in sufficient quantities for whatever they wanted to do. That perception, however, has started to change as the impacts of climate change – from droughts to catastrophic floods to changes in rainfall patterns – start to make themselves felt on water supplies, infrastructure and business operations around the world. Water risks now feature prominently in the World Economic Forum’s annual Global Risks Report, opens new tab.
At the same time demand is increasing, in part from new sources, such as the data centres that help to drive the AI revolution. There is also growing concern about pollution from substances such as PFAS forever chemicals, and over-exploitation of reserves.
In the U.S., the Ogallala Aquifer, which runs from South Dakota to Texas, provides a quarter of the water used in U.S. agriculture, irrigating fields that produce $7 billion of crops a year. But water levels in the aquifer have dropped precipitously thanks to drought and abstraction by farmers.
“There’s either too little or too much,” says Alison Gilbert, water stewardship lead at consultancy Anthesis. ”Companies are having to deal with scarcity, floods and poor quality as well as growing regulatory and reputational risks. And they recognise that they need to do something about it.”
Recognition, however, is not necessarily translating into action. At COP16 in Cali in October, Nature Action 100, the investor-led initiative to engage with companies deemed systematically important in stemming nature loss, reported in its inaugural benchmark assessment, opens new tab that while over two-thirds disclose a commitment to protect nature, only one had done a comprehensive materiality assessment of nature-related dependencies, impacts, risks or opportunities.
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