Swedish pensions giant AP7 said investors must talk to companies and others to get better reporting on the global problem of access to water – describing it as one of the existential threats facing the world today.
The SEK722.5bn (€71bn) pension fund and Impax Asset Management published a joint study this week on the topic, with the main finding that at the moment, only a few standards or globally-agreed frameworks exist to measure water impact.
Johan Florén, AP7’s head of communication and ESG, and the Stockholm-based pension fund’s manager of ESG analysis Flora Gaber, wrote in the report: “None of the studied open-source frameworks captured all the elements required to produce a full and holistic view of water impact.”
Also, they said, the frameworks focused mainly on water quantity and not enough on water quality and pollution.
“Therefore, investors must engage with companies and standard setters to improve reporting by companies,” the pair said, adding that the report presented “a roadmap for investor dialogue”.
The report recommended moving to common water impact indicators so the effect companies have on water could be compared and aggregated across different investments, and assessed at portfolio level, AP7 and Impax said.
The two investors said they recommended considering three different elements – water withdrawals; positive water solutions and local water circumstances – in order to get a full picture of the problem that could then be used to make decisions.
To help solve the lack of available frameworks, AP7 and Impax said they had developed a “water impact metric dashboard”, which gave a closer assessment of the most relevant water impact metrics.
Florén and Gabler said: “Climate change, access to water and loss of biodiversity have become existential threats and politicians have been forced to collaborate on a global scale.”
Transparent reporting of real effects on access to water was a first step for investors to be able to evaluate the societal impact of their investments, and understand corporate governance considerations better, they said.