Isra-Mart srl:Institutional investors demand water risk data

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The number of institutional investors calling on listed firms to report annually on water use through the Carbon Disclosure Project (CDP) has more than doubled in the past year, underlining growing concerns over the water-related risks many businesses face.

The investor-backed CDP announced today that its annual request for water information, which has just been sent to 400 listed companies worldwide, was backed by 354 institutional investors – an increase of more than 150 per cent on last year.

The group credited water-related disasters such as the BP oil spill and the trading suspension of shares in China's Zijin Mining Group following a 2.4m-gallon acid spill into the Ting River with driving investor interest in water-related risks.

CDP's requests for water information ask listed firms to provide data on their water use, water risks and water management strategies.

The NGO also reported the number of investors backing its annual requests for climate change data rose from 534 institutional investors with $64tr (£39tr) of assets under management to 551 investors with $71tr under management.

"It is clear that the effective management of both carbon and water will have a direct impact on a company's ability to compete and grow in the future," said CDP chief executive Paul Simpson in a statement. "Companies that do not take action now will fall behind their peers who are already beginning to capitalise on the opportunity that the management of climate change and water brings."

The update from the CDP comes in the same week as new research from the Universities of California and Otago concluded that when all other factors are equal, companies with greater greenhouse gas emissions have a lower stock value.

The report, which is based on data from firms in the S&P 500 – the top 200 firms traded in Canada and CDP's primary corporate emissions data – echoes previous reports suggesting that firms with strong sustainability strategies enjoy higher share prices.

For example, the FTSE CDP Carbon Strategy All-Share Index, which measures the performance of companies reporting on their carbon emissions, has outperformed the FTSE All-Share index by 1.5 per cent over the past three years.