GLOBAL - Water security is high on the corporate agenda, with two-thirds - 67% - of respondents to a survey reporting responsibility for water-related issues at the board or executive committee level.
This is one of the findings of CDP Water Disclosure, a programme from the Carbon Disclosure Project.
The information was requested on behalf of 137 institutional investors with a total of $16trn (€11.7trn) in assets under management to increase transparency and accountability on water scarcity and other water-related issues, and help drive sustainability.
The report shows that water is already impacting business operations, with 96% of responding companies able to identify whether or not they are exposed to water risk and more than half of those reporting risks classifying them as current or near-term.
Of the responding companies, 39% are already experiencing water-related detrimental impacts, including disruption to operations from drought or flooding, declining water quality necessitating costly on-site pre-treatment, increases in water prices and fines and litigation relating to pollution incidents.
Anne Kvam, global head of ownership strategies at Norges Bank Investment Management (NBIM), a lead sponsor of the programme, said: "As a diversified investor with a long-term outlook and investments in a range of sectors at risk from increasingly scarce water resources, we take water management seriously.
"Companies that fail to consider the impact of water scarcity and other water-related risks pose a financial risk to investments."
The majority of companies - 89% - have already developed specific water policies, strategies and plans, while 60% have set water-related performance targets.
Furthermore, a high number of corporations, 62%, are identifying a wide range of water-related business opportunities in areas such as water management, water efficiency and reduction and wastewater treatment.
However, as opposed to the high levels of awareness of water risks in their own operations, just 53% of companies are able to identify whether they are exposed to water risks in their supply chains.
Sectors reporting the greatest exposure to water risks include food, beverage and tobacco and metals and mining, with chemicals and technology and communications the least exposed.
Physical risks to direct operations from drought and flooding were most frequently cited, but companies also recognise risks from changing regulations and reputational damage.
CDP Water Disclosure sent its first annual questionnaire on water use and other water-related business issues to 302 of the world's largest companies.
It received a 50% response rate, with 122 of these responding publicly and a further 25 companies responding on a purely voluntary basis.
To download the full report, click here.