We see evidence of this in their policies for voting at shareholder meetings and engagement with companies on sustainability issues.
For example, BlackRock – as part of its wider policy on natural capital topics – mentions that it looks to companies to disclose detailed information on their approach to managing material, natural, capital-related business risks and opportunities, including how their business models are consistent with the sustainable use and management of natural resources such as air, water, land, minerals and forests.
It says: "To support investors’ assessments, it is helpful for companies with material dependencies or impacts on natural habitats to disclose how they measure their progress on key issues such as water conservation."
Our research has also found substantive comments on water-related sustainability expectations by eight managers: AllianceBernstein, BNP Paribas, Boston Trust Walden, Calvert, LGIM, Robeco, Schroders and UBS.
Their policies cover three key areas:
- Focus on water as part of a holistic environmental approach.
- Encouraging better corporate reporting and clearer policies.
- Support for shareholder resolutions addressing water-related risks.
As interest in water risk grows, against a backdrop of wider concern about natural capital issues linked to climate and biodiversity preservation, we can only expect investors to place more emphasis on water-related themes in future when selecting the companies they invest in and engage with.
Lindsey Stewart is director of investment stewardship research – ESG and sustainability at Morningstar
