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Water-risk reporting trails behind climate change, study finds

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  • Water-risk reporting trails behind climate change, study finds

GLOBAL - More than half of publicly listed organisations issue reports at board level on company water policies, according to the Carbon Disclosure Project's (CDP) water disclosure global report.

Of the 190 publicly listed companies participating in the survey, 57% said progress on water policies were reported at board level, compared with a nearly universal level of reporting on climate change risk.

A report released by CDP in September showed that 94% of Global 500 companies report board-level oversight of climate change, with CDP suggesting corporate understanding of water as a business concern trailed that of climate change.

More than half (59%) of companies surveyed reported exposure to water-related risks such as flooding, scarcity and reputational damage.

The majority of these risks were near term, with 64% of risks in direct operations and 66% in the supply chain identified as occurring between now and 2016.

Nearly 40% of responding companies have already experienced water-related business impacts, such as disruption to operations from severe weather events and water shortages, the survey found.

Anne Kvam - global head of ownership strategies at Norges Bank Investment Management (NBIM), asset manager for the NOK3trn (€388bn) Norwegian Pension Fund Global and a lead sponsor of CDP Water Disclosure - stressed that water management was taken "seriously", as it invested in more than 8,000 companies.

"Companies are placing more weight on water issues, which are both a risk and an opportunity," she said. "[But they] need to strengthen oversight of water issues and get a better understanding of water-related risks in their supply chains."

NBIM previously called for a consensus approach to water management reporting, with the lack of a universal standard regarded as a problem.

CDP's Water Disclosure Global Report surveyed 315 companies on the Global 500 index  identified as operating in the most water-stressed locations or industry sectors.

CDP Water Disclosure collects data annually on water use, strategies, risks and opportunities from companies on behalf of 354 investors representing $43trn (€32trn) in assets.

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