World Water Day, held on March 22, aimed to raise awareness of the 2bn people living without access to safe water.
This year it also marked the start of the UN’s 2023 water conference, taking place over three days in New York. It was a rare occasion on which heads of state from around the world gathered to discuss the security of the world’s water supply.
Naturally, the conference has lofty aims. As UN secretary general António Guterres put it: “The UN 2023 water conference in March must result in a bold water action agenda that gives our world's lifeblood the commitment it deserves.”
The UN’s sustainable development goals, used as a reference point in many sustainable and impact investing strategies, refer to this: SDG six aims to “ensure availability and sustainable management of water and sanitation for all” by 2030.
However, at present this goal sits against a stark reality.
"Global water use has increased by a factor of six over the past 100 years and continues to grow steadily at a rate of about 1 per cent per year," according to a 2020 study by the UN.
It also states that "the world could face a 40 per cent global water deficit by 2030 under a business-as-usual scenario".
The conference aimed to compile a water action agenda to accelerate implementation and improve the impact of efforts to deliver on SDG six.
With time running out and major investment needed to achieve that goal, investors are increasingly looking for ways to support this effort.
Investors call for action from governments and companies
Conscious of this emerging risk, in February, 30 investment institutions also signed an open letter, co-ordinated by environmental reporting specialist CDP, calling on “all governments to step up their collective response to the water crisis".
This call followed the launch of the Valuing Water Finance Initiative in August 2022 by a group of asset owners and asset managers seeking to tackle some of the key issues.
The VWFI aims to address water-related risks in investing by "engaging companies with a high water footprint to value and act on water as a financial risk and drive the necessary large-scale change to better protect water systems".
Its 64 signatories have almost $10tn (£8.2tn) of assets under management.
The VWFI is currently targeting 72 companies for engagement, most of which are in the food and beverage, apparel, and technology industries.
It outlines six expectations that it expects large companies to meet by 2030, covering water quantity, water quality, ecosystem protection, access to water and sanitation, board oversight, and public policy engagement.
Although such co-ordinated action is still in its infancy, investment institutions are already stepping up their stewardship efforts with regard to water.
Investment stewardship efforts on water already intensifying
A recent Morningstar research paper found that managers are getting more specific about the kind of reporting and behaviour they expect from companies on responsible water use.
