New CDP tool ranks the critical impact sectors are having on global water resources

First-of-its-kind tool can rank 200 industrial activities based on their impact on water quality and quantity, identifying the sectors producing the greatest impact on global water resources.

CPD’s Water Impact Index can be used by investors and financial institutions to assess their impact on water resources and water security.

The tool can assess the water impact of each industrial activity at different stages of the value chain.

The industries causing the greatest impact on our water resources include the apparel and textile manufacturing sector, cotton farming, livestock farming, oil and gas extraction, and mining.

Also, the finance sector’s money flow into high impact companies has shown to enable water pollution and depletion. Cases include the construction of dams at the heads of free-flowing rivers, the release of toxic pollution from chemical, apparel, and pharmaceutical companies, and the excessive pumping of non-renewable groundwater by agribusinesses.

The Water Impact Index will allow financial institutions to understand the relative impact of industrial activities on the world’s water resources, filling a critical data gap, and encouraging capital markets to take action to address water security issues.

However, Chevron and Royal Dutch Shell are amongst the world’s largest companies who have repeatedly failed to disclose their water-related data to investors. Campaigners claim these companies will face regulatory, reputational and supply chain risks as a result.

Cate Lamb, Global Director of Water Security at CDP, said: “Achieving a water secure, net zero future will require a complete transformation of our global economy and urgent action is needed. To succeed, companies responsible for the greatest impacts on water resources must transform their business models, products and practices in ways that decouple production and consumption from the depletion of water resources.”

“Financial institutions have a critical role to play in facilitating the transition to a water-secure economy. Water Watch: CDP’s Water Impact Index shows that the level of water impact in investment portfolios is significant, with banks, investors and insurers being exposed to critical levels of water impacts, and hence risk, through their shareholdings and loans. Equipped with the right information and robust data, investors can drive progress toward a water secure future.”