The next step: Investor s role in protecting water security

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Benedict Brooks
5 years ago
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1 The next step: Investor s role in protecting water security Laurent Babikian Director Investor Engagement Europe Page 1

2 Water insecurity - the case for action Demand for water is expected to increase in all sectors of production with economic consequences if not properly managed: The UN predicts a 40% global shortfall in water supply by 2030 The IEA projects a 30% increase in global energy demand by 2040 and the UN projects a 70% increase in food demand by 2050; and The World Bank predicts water security, exacerbated by climate change, could cost some of the world s regions up to 6% of GDP by Unlike Climate Change, Lack of international governance Page 2

3 CDP holds the world s largest corporate water dataset This data is collected on behalf of: 656 institutional investors, representing US$ 87 trillion in assets 34 purchasing organizations with a combined spend of US$1 trillion Page 3

4 The business case for action on water Page 4

5 Water is a material issue for investors Page 5

6 What does CDP s data tell us? Page 6

7 Water risks are rapidly materializing for business More than 3,700 substantive water risks reported in % exposed to substantive business risks from water 56% expect these risks to materialize over the next 6 years % of companies see higher water prices as a potential risk Page 7

8 Top five risks Page 8

9 Companies are waking up to the real value of water Diageo Plc uses an internal total cost of water tool to anticipate price increases and assist business and investment decisions. Page 9

10 Money is now flowing into solutions Investment of US$6.4 trillion required to meet the SDGs by 2030 Companies are stepping up: they have committed US$23.4 billion More than 1,000 projects to tackle water risks in 91 countries around the world Page 10

11 Accelerating action through scoring CDP wants to catalyze better corporate water stewardship Investors want benchmarking metrics and indicators CDP Water A list: o 8 companies in 2015 o 25 companies in 2016 o 74 companies in 2017 Page 11

12 The financial community is responding Page 12

13 CDP data across the financial community Buy side Sell side Research providers CDP Index providers Investment advisors Page 13

14 Investor research uses CDP data Page 14

15 CalPERS Largest public pension fund in the US - $300bn in assets New governance strategy includes a focus on water risk Asks all companies that it invests in to complete CDP s water questionnaire Page 15

16 Amundi Over $1.1tn AUM New proprietary tool assesses companies exposure to water security and sources information from CDP data. Particular attention to CDP s raw data such as water withdrawal data. Amundi will either enter into a phase of dialogue or downgrade the company if identified as not taking appropriate actions to address water risks. Page 16

17 Other Global Investors A coalition of Swedish and Dutch pension funds and investment managers pledge to use the Sustainable Development Goals, which include targets for access to water, as a framework to make investments. NBIM, the manager of Norway s sovereign wealth fund, is a lead sponsor of CDP s water program. Interfaith Center on Corporate Responsibility uses CDP s water data to determine the water policy companies have set up to preserve water resources in the framework of social justice. Church Investors Group, representing US$19.5 billion of assets, engaged with 37 companies failing to respond to CDP s water information request in 2016, leading almost half (16) to move towards disclosure. PGGM is a member of CDP s Water Advisory Board and actively engages on water with portfolio companies. bcimc uses a combination of CDP Water Analytics, CDP Water Annual Reports and the custom cut extraction tool to track the success/traction of their engagements. Page 17

18 CDP data and reports for investors Page 18

19 CDP s sectors 2017 Consumer Discretionary Consumer Staples Energy Health Care Industrials Information Technology Materials Utilities Page 19

20 Page 20

21 Water data and tools available as a CDP Investor Member Company Responses to CDP Water Questionnaire Copy of individual company responses Excel sheet with all responses for all reporting companies (up to 300 data points/company for 1230 companies in 2016) CDP Water Scores Water Program Scores Individual company scorecards summarizing water performance relative to peers CDP Analytic Tools Ability to filter data by year, specific companies, country, and sector across various data points More than 20 visual analytic comparisons, graphs and charts * If also a signatory to the water program. Non-signatories can access up to 20 public company responses per year. Page 21

22 CDP sector research for investors Focus on seven key sectors: Transport, Utilities, Materials/Chemicals, Metals & Mining, Consumer Goods, & Oil & Gas Flags material environmental and regulatory issues within each sector and the potential impact on companies financials Combines metrics to create a super league table Identifies topics for company dialogue and benchmarking for engagement Water resilience is a key KPI for all sectors but autos Page 22

23 What next? Page 23

24 CDP s Reimagining Disclosure Initiative Page 24

25 Merci! Please contact me at Page 25

Investor perspective; the importance of corporate water stewardship and disclosure

Investor perspective; the importance of corporate water stewardship and disclosure 26 th March 2015 sarah.robertson@cdp.net CBichta@bostoncommonasset.com Chris.fowle@cdp.net Page 1 Agenda Introduction