Markets & Enterprise

Three major financial institutions and two of the world’s largest food and beverage companies are driving improved water management using data from Aqueduct’s Water Risk Atlas. This list includes: Anheuser-Busch InBev, the leading global brewer; Nestlé, the world’s largest food and beverage company; LGIM, one of Europe’s largest institutional asset managers; one of the world’s largest banks; and one of the world’s largest pension fund managers.

The Challenge

Water risks—such as floods, drought, and increased competition for scarce water resources—are increasingly chipping into corporate bottom lines. The financial sector is taking notice, as companies and investors seek robust and comprehensive data to inform their decision-making processes. Previously, water risk had not been widely incorporated into financial risk assessments or business strategies, primarily because of a lack of awareness of business vulnerability to water risks, poor data, and uncertainty on how to use what information was available.

WRI’s Role

In January 2013, WRI launched the Aqueduct Water Risk Atlas, a comprehensive water risk mapping tool that highlights water risk hotspots for a company’s direct operations and supply chains. Using a scientific approach, the tool is transparent, robust, and is translated into a set of easy-to-use water risk indicators and maps. Within six months from launch, the uptake of Aqueduct’s data by investors and companies has steadily increased, as has use by governments, academic, and civil society groups.

Our Impact

Some of the world’s biggest global companies, funds, and investors are driving improved local water management, thanks Aqueduct’s information. Investors like LGIM are increasingly using Aqueduct water risk data to inform investment decisions, and multinational industry leaders like Nestlé and AB InBev are adopting Aqueduct’s Water Risk Atlas as a critical component of their corporate water strategies. The popularity of the Aqueduct tool provides strong evidence that:

• The investment community’s water-related risk awareness is growing;
• Investors can become key drivers for improved corporate water management worldwide; and
• Major multinational companies are incorporating water into business strategies to drive action on the ground and reduce shared water risks in watersheds.

JP Morgan, one of the world’s leading investment banks with 8,000 clients in more than 100 countries, has adopted new environmental policies based in significant part on WRI advice. JP Morgan will account for greenhouse gas emissions associated with their lending portfolio. The bank will work with clients to develop financing solutions to fund development of lower carbon-emitting technology solutions and investments in greenhouse gas reductions. The bank will lead efforts with other financial institutions advocating for the U.S. government’s adoption of a market-based national policy on greenhouse gas emission reductions.

The financial implications of environmental opportunities and risk need to be understood by financial institutions and investors, and reflected in the world’s capital markets. Our collaboration with Merrill Lynch, one of the world’s leading financial management and advisory companies, has resulted in their report, “Energy Security and Climate Change: Investing in the Clean Car Revolution.” Merrill Lynch uses this report to advise clients about investments in the auto industry. WRI’s work with Merrill Lynch advances our efforts to involve the financial sector in addressing climate change.

WRI’s partnership with General Electric is one example of harnessing the power of business to solve environmental challenges. This year, GE launched “Ecomagination”, a climate strategy based on product development and operational performance goals. GE plans to double its revenue from energy-efficient and other green products while reducing its corporate greenhouse emissions by 2010. Working with WRI, as a member of our corporate working group on climate, GE made the business decision that it can find opportunity in selling technologies that reduce greenhouse gas emissions. When an iconic company like GE makes confronting global climate change a major element of its business strategy, other corporate leaders take heed.

Measuring greenhouse gases is critical for companies and governments looking to reduce their greenhouse gas emissions. The Greenhouse Gas Protocol (GHGP), created by WRI and The World Business Council on Sustainable Development, is becoming the global standard for measuring GHG emissions. The Swiss-based International Organization for standardization (ISO), the world’s leading developer of standards for corporate accountability, recently adopted the GHG Protocol. Various ISO standards are being used by more than half a million organizations in 159 countries. Standardization will promote a convergence of greenhouse accounting practices globally, and in this way will reduce costs, improve comparability, and strengthen the capacity of corporate leaders to make informed decisions on greenhouse gas risks and opportunities.

Seventy percent of Latin Americans live on less that $3 a day. That’s 360 million people with a combined purchasing power of $510 billion. WRI is looking at how to meet the needs of poor communities through pro-environment private sector strategies and catalyzing investments by companies and development agencies. This new approach was adopted by the Inter-American Development Back (IDB), one of the largest development aid agencies working in Latin America, when it launched a five-year, multi-billion dollar poverty reduction initiative. “Building Opportunity for the Majority” focuses on economic empowerment for the poor through the support of private-public opportunities. IDB is the first development bank to make a commitment of this size, giving this innovative market approach enormous credibility and visibility.