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Report Warns Businesses and Investors about Growing Water Scarcity Impacts from
Climate Change
Author: Anonymous
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Abstract:
[...] agricultural and power plant production have been cut back due to more frequent and more intense
heat waves and droughts in large parts of Australia, California and the southeast U.S. "The business
community needs to wake up to the reality that water is becoming scarcer and will likely become even
more so in many parts of the world due to climate change," said Mindy S. Lubber, president of Ceres,
which published the report, Water Scarcity & Climate Change: For businesses, addressing the risk factors
of water scarcity and conflict is as urgent as addressing energy security and greenhouse gas emissions,
said Jason Morrison, program director at the Pacific Institute and the report's lead author.
Full text:
Climate Risks Mean New Problems for Vulnerable Sectors, including Electric Power, High-Tech,
Agriculture and Beverages
BOSTON, Feb, 26 /PRNewswire-USNewswire/ -- Global climate change is exacerbating water scarcity
problems around the world, yet few businesses and investors are paying attention to this growing
financial threat, according to a report issued today by Ceres and the Pacific Institute.
Water is crucial for the global economy -- driving every industry from agriculture to electric power to
silicon chip manufacturing. Beverage, apparel and tourism also rely on supplies of clean, potable water to
survive and grow.
Decreasing water availability, declining water quality and growing water demand are creating immense
challenges to businesses and investors who have historically taken clean, reliable and inexpensive water
for granted. These trends are causing decreases in companies' water allotments for manufacturing, shifts
towards full-cost water pricing, more stringent water quality regulations and increased public scrutiny of
corporate water practices.
The report concludes that climate change will exacerbate these growing water risks -- especially as the
world population grows by 50 million people every year. Already, China, India and the western U.S. are
seeing growth limited by reduced water supplies from shrinking glaciers and melting snowcaps that
sustain key rivers. Meanwhile, agricultural and power plant production have been cut back due to more
frequent and more intense heat waves and droughts in large parts of Australia, California and the
southeast U.S.
"The business community needs to wake up to the reality that water is becoming scarcer and will likely
become even more so in many parts of the world due to climate change," said Mindy S. Lubber, president
of Ceres, which published the report, Water Scarcity & Climate Change: Growing Risks for Businesses
and Investors. "It is critical that companies and investors boost their attention on this issue."
"This research sheds important light on the critical link between climate change and water issues. For
businesses, addressing the risk factors of water scarcity and conflict is as urgent as addressing energy
security and greenhouse gas emissions," said Jason Morrison, program director at the Pacific Institute
and the report's lead author. "With impacts of climate change on water resources already affecting
businesses, this report provides a first-of-its-kind list of key questions companies and investors should be
asking -- and responding to -- in an integrated way."
The report identifies water-related risks specific to eight key industries, including:
-- Electric Power: Drought-induced water shortages have already caused
power plant shutdowns in Europe, Brazil and the southeast U.S. that led
to price spikes and reduced economic growth. The power industry depends
heavily on water and accounts for a staggering 39 percent of freshwater
withdrawals in the U.S.
-- High-Tech: Eleven of the world's 14 largest semiconductor factories
are in the Asia-Pacific region, where water scarcity risks are
especially severe. IT firms require vast amounts of ultra clean water -Intel and Texas Instruments alone used 11 billion gallons to make
silicon chips in 2007. A water-related shutdown at a fabrication
facility operated by these firms could result in $100-$200 million in
missed revenue during a quarter, or $0.02 or $0.04 per share.
-- Beverage: Coca-Cola and PepsiCo bottlers lost their operating licenses
in parts of India due to water shortages and all major beverage firms
are facing stiff public opposition to new bottling plants -- and to
buying bottled drinking water altogether. Nestle Waters has been
fighting for five years, for example, to build the country's
largest bottling plant in McCloud, CA.
-- Agriculture: Reduced water availability is already impacting food
commodity prices, as shown by last year's sharp increase in global
rice prices triggered by a drought-induced collapse of rice production
in Australia. Roughly 70 percent of the water used globally is for
agriculture, with as much as 90 percent in developing countries where
populations are growing fastest.
The report also identified specific water-related risks for apparel, biotechnology/pharmaceutical, forest
products and metals/mining firms.
"This report makes clear that companies and investors can no longer take water for granted," said Anne
Stausboll, chief executive officer of the California Public Employees' Retirement System, the nation's
largest public pension fund with approximately $170 billion in assets. "As a global investor, we must be
mindful of water-related risks in many parts of the world and how climate change will likely exacerbate
many of those risks. Disclosure by companies is an important first step in improving transparency around
the risks and opportunities associated with water and climate change."
The report also highlights the intensifying conflict between energy use and water availability. With
increasing frequency, choosing one of these resources means undermining the other -- the other usually
being water. For example, the billions of dollars spent to expand corn-based ethanol production in the
U.S. and oil sands development in Canada has helped ensure increased fuel supplies, but at the expense
of significant water impacts and greenhouse gas emissions that could ultimately limit these ventures in
the future.
Despite these looming challenges, the report concludes that businesses and investors are largely
unaware of water-related risks or how climate change will likely exacerbate them. Weak corporate
disclosure on potential risk exposure and response strategies is especially glaring.
To evaluate and effectively address water risks, companies should take the following actions:
-- Measure the company's water footprint (i.e., water use and
wastewater discharge) throughout its entire value chain, including
suppliers and product use.
-- Assess physical, regulatory and reputational risks associated with its
water footprint, and seek to align the evaluation with the
company's energy and climate risk assessments.
-- Engage key stakeholders (e.g., local communities, non-governmental
organizations, government bodies, suppliers and employees) as a part of
water risk assessment, long-term planning and implementation activities.
-- Integrate water issues into strategic business planning and governance
structures.
-- Disclose and communicate water performance and associated risks.
Similarly, investors should pursue the following steps to better understand potential water-related
exposure in their portfolio companies:
-- Independently assess companies' water risk exposure.
-- Demand more meaningful corporate water disclosure.
-- Encourage companies to incorporate water issues into their climate
change strategies.
-- Emphasize the business opportunity side of the water challenge.
About Ceres
Ceres is a leading coalition of investors, environmental groups and other public interest groups working
with companies to address sustainability challenges such as global climate change. Ceres directs the
Investor Network on Climate Risk, a network of 75 institutional investors and financial firms with collective
assets totaling nearly $7 trillion focused on the business impacts of climate change. www.ceres.org
About Pacific Institute
The Pacific Institute is a nonprofit research organization in Oakland, California dedicated to protecting our
natural world, encouraging sustainable development, and improving global security. Founded in 1987, the
Institute provides independent research and policy analysis on issues at the intersection of development,
environment, and security and aims to find real-world solutions to problems like water shortages, habitat
destruction, global warming, and environmental injustice. www.pacinst.org.
SOURCE Ceres, Boston, MA and Pacific Institute, Oakland, CA
Credit: Ceres, Boston, MA and Pacific Institute, Oakland, CA
Subject: Water shortages; Shutdowns; Climate change; Water quality; Risk factors; Industrial plant
emissions; Emission standards; Electric power; Drought; Developing countries--LDCs; Commodity prices
Publication title: PR Newswire
Publication year: 2009
Publication date: Feb 26, 2009
Year: 2009
Dateline: BOSTON
Publisher: PR Newswire Association LLC
Place of publication: New York
Country of publication: United States
Publication subject: Business And Economics
Source type: Wire Feeds
Language of publication: English
Document type: News
ProQuest document ID: 448203057
Document URL: http://search.proquest.com/docview/448203057?accountid=66290
Copyright: Copyright PR Newswire Association LLC Feb 26, 2009
Last updated: 2010-11-03
Database: ProQuest Newsstand
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Citation style: MLA7
"Report Warns Businesses and Investors about Growing Water Scarcity Impacts from Climate Change."
PR NewswireFeb 26 2009. ProQuest. Web. 4 Mar. 2015
<http://search.proquest.com/docview/448203057?accountid=66290>.
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