Last Wednesday, environmental reporting company CDP (formerly Carbon Disclosure Project) brought online its latest water impact assessment tool Water Watch, which tracks strain on freshwater resources across more than 200 industry activities. Each activity is assessed for its intensity of water consumption and pollution in its direct operations, supply chain, and product use and given a “water impact rank” from low (0-4) to critical (15-18). CDP’s stated purpose with Water Watch is to improve awareness among investors, companies, and governments about how their activities are affecting water security.
Of the 213 activities included in the index, five received the maximum impact rank of 18: apparel design and manufacturing, cotton farming, oil and gas extraction, inorganic base chemicals manufacturing, and financial services. The first four have direct impacts on water via processing raw materials into finished garments, irrigating crops, drilling and fracking, and producing chemicals that generate wastewater. Financial services is not a water-intensive industry in itself, but it funds activities that are.
In contrast, five activities received the low rank: electricity networks, recycling, waste management, sporting goods, and geothermal generation.
The most water intensive sectors overall are food, beverage, and agriculture, fossil fuels, chemicals, and metals. CDP’s Global Director of Capital Markets stated that 70% of water extraction is accounted for by just eight industries.
CDP reported in its Global Water Report 2020 that the financial risks of water scarcity are already “five times higher than the cost of addressing them” and that business opportunities in water security investment could be as high as $711 billion. In the report, CDP also emphasized that industries save money by utilizing water more efficiently. One example given is food company Mars, which implemented a “wet-dry” irrigation system for rice cultivation that “is expected to reduce water consumption by 30% and save the company $60-180 million.”
According to the World Resources Institute, 25% of the world’s population is currently experiencing “extremely high” water stress. CDP’s Global Director of Water Security noted that “managing our water resources, landscapes, institutions and infrastructure will be vital to enabling us all to thrive in a changing climate.”
Download the full Water Watch index here.
By Austen Tannenbaum, contributing writer