ESG | Opinion
Water wars
Water scarcity is on the rise and investors need to push companies into conserving it, says Mark Dunne.
ing water risks, such as scarcity and quality, is 75%, up from 70% in 2015. Yet there has been an almost 50% rise in the number of companies using more water in their opera- tions in the past three years.
The agriculture, food, mineral extraction and manufacturing sectors,
Daniel Craig’s debut James Bond film Casino Royale was hailed by the critics on its release in 2006. The welcome for Quantum of Sol- ace two years later was not as warm, yet it could hold more political significance in the decades to come. The plot of Craig’s second outing as the famed MI6 agent is the reason why it could be referenced by campaigners long after Casino Royale is remembered for being just another Bond film.
It centres on a businessman trying to con- trol Bolivia’s water supply. This would give him power over its government while boost- ing his bank balance. Supply controlled by commercial compa- nies, dictators or criminals could be a com- mon occurrence in the years to come. Indeed, wars could be fought to get control of its supply.
The availability of water to drink, bathe in and to help grow food is largely taken for
granted, especially in the developed world. But this could soon change. Population growth, more people living in cities and climate change mean that demand is expected to rise.
The problem is that supply cannot rise with it. Water is finite and science is yet to unlock the secret of making more of it. So we must conserve it because, after all, we don’t want to be in a situation where it is being ransomed by companies or individu- als. You can live without diamonds, gold and even electricity, but not water. This is a life and death issue. Indeed, the United Nations (UN) has named water stress as one of the biggest threats to global stability. It esti- mates that more than 5 billion people could suffer from water shortages by 2050. So the recent findings of Treading Water, a report published by environmental data spe- cialist CDP, do not make easy reading. It says that the number of companies report-
especially in
Asia and Latin America, feature prominently on the list of those that could do more to conserve water.
Of the 800 publically-listed companies, with a combined $18trn (£13.7trn) market cap, that CDP analysed; only 31 are working to cut their water usage. These include pharma- ceutical giant AstraZeneca and drinks group Diageo as well as household names L’Oreal and Microsoft.
This is an important issue. If the supply of quality water is not managed effectively it will hit economic growth, not to mention our health.
Investors and regulators around the world need to work with companies to convince them to use less water or there could be a shortage. The alternative is to call in James Bond, who by the end of Quantum of Solace thwarted the villain’s plans, thus preserving access to water.
The problem is that Bond is not real, but the threat of a water shortage is.
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24 | portfolio institutional | March 2019 | issue 82
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