Global Water Report
The international climate change research institute CDP has released a global water report, which analyzes the water resource disclosures of over 3900 companies and analyzes the global water market of over 400 billion US dollars. This report was jointly launched by the Norwegian Sovereign Wealth Fund (Norges Bank Investment Management) and is also a midpoint period since the launch of the Global Water Action Decade in 1977.
The report believes that there is a global need for more transparent and consistent solutions in order to contain the water resources crisis and the climate change crisis. This requires companies to actively take action to strengthen investment actions at the corporate level, led by the private sector, to achieve water security.
Information Disclosure of Water Resources
Last year, global water resources experienced some worrying incidents, such as the worst drought in 500 years in Europe, and permanent chemicals were found in rainfall. At the same time, the global community is also actively working to address these issues. The COP conference included water resources on the official agenda for the first time, and the Network for Greening the Financial System accelerated the construction of the natural financial system.
Past experience has shown that private sector disclosure plays an essential role in water resources development. According to CDP, water resource disclosure has increased by 85% in the past five years. Last year, more than 3900 companies disclosed water resource data, an increase of 16% compared to its previous year. Water disclosure in manufactural industry grew the fastest, reaching 23%.
From the perspective of regulatory authorities, only the European Union and the United Kingdom are formulating mandatory disclosure standards, while other countries are still seeking opinions. The European Sustainability Reporting Standards (ESRS) have listed water resources as a key topic and require listed companies to disclose relevant content in ESG reports starting from 2024.
Corporate Investment in Water Resources
Corporate investment can provide solutions to global water issues. For enterprises, corporate investment can bring the following advantages:
- Efficiency: Reduce production costs and improve operating income;
- Market: Expand market scale and achieve diversified income;
- Product: Gain competitive advantage and meet consumer preferences;
- Risk: Improve supply chain stability and reduce water resource risk exposure;
CDP survey shows that investment in water resources will bring more than 430 billion US dollars in market opportunities, and more than one-third of respondents are increasing their investment, with the electric power industry accounting for the highest proportion. CDP believes that the current price of water resources does not reflect the true cost of using these resources, nor does the allocation mechanism reflect the scarcity of this resource. Many companies tend to believe that they always have enough water to meet their needs.
Product Innovation in Water Resources
In addition to improving the efficiency of water use, CDP has found that many companies are developing low water impact products to meet consumer demand. These products also comply with regulatory agency policies and can help companies reduce water resource risks.
According to the survey, innovation in water resource related products has not yet expanded to the upstream and downstream of supply chain. Only 14% encourage supply chain collaborative innovation, and 1% provide economic incentives. In this field, there are still many things that enterprises need to do.
CDP believes that if all respondents can recognize opportunities related to water resources, they can create a potential market of more than $1 trillion. Under the background of the United Nations Water Conference (held for the first time in 46 years), private sector needs to take action to address the global water crisis together.