GreenMoney: The Future of Water—Impacting Businesses and Communities

GreenMoney Interviews: Kirsten James on Ceres’ Valuing Water Finance Initiative

As the global water crisis worsens, so do financial risks facing companies and their investors. Kirsten James, senior program director of water at the sustainability nonprofit Ceres, answers questions from Cliff Feigenbaum, Founder and Managing Editor of GreenMoney about the Valuing Water Finance Initiative, which is a global, investor-led effort driving companies to prioritize water risk and act as responsible water stewards in their operations and supply chains.

Cliff Feigenbaum:  What work has Ceres done related to water?

Kristen James: Freshwater is essential for people, ecosystems, and business. Growing water scarcity and pollution is threatening these systems and slowing the pathway to a climate resilient future. Research shows we’ll be unable to meet even 56 percent of global water demand by 2030. No industry is immune from financial risks stemming from this crisis.

Seeing this writing on the wall, we’ve spent more than a decade establishing the business case for the private sector to act on water risk. We’ve worked closely with investors on integrating water risk into their investment decisions and developed resources to help them understand water risk in their portfolios. Our research and corporate benchmarking has shed light on industry practices threatening freshwater supplies and how companies are responding. This information has empowered investors with the guidance and the data they need to evaluate how companies are managing water risk.

Cliff:  How did this work pave the way for the Valuing Water Finance Initiative?

Kristen: Through this pioneering work we did on water risk, we saw the need for ambitious action to match the scope of the water crisis and the systemic risks affecting communities, nature, and economies. We developed the Valuing Water Finance Initiative, aimed at driving companies to make water risk and water management a priority in their business strategies. Because water is key to their success as a business.

This work is hitting home with investors and the initiative has taken off. Just two years after we launched it, nearly 100 investors representing more than $17 trillion in assets have joined. These investors are committing to engage with 72 large companies from four water-intensive industries—food, beverage, apparel, and high-tech—on their water management practices.

Cliff:  How does Ceres see investors’ efforts through the Valuing Water Finance Initiative leading to action on the ground? 

Kristen: Companies aren’t just at risk from dwindling water supplies and polluted water, they’re making these risks worse by mismanaging and undervaluing water resources. Investors play a crucial role, as shareholders of companies, in compelling businesses to preserve and protect the water supplies they depend on.

 Through the Valuing Water Finance Initiative, investors are encouraging companies to develop holistic water management strategies by focusing on six Corporate Expectations for Valuing Water. These expectations set ambitions around the full range of water issues that large companies should meet by 2030. This timeline is critical to slowing the pace of deteriorating water resources across the globe and meeting the United Nations 2030 Sustainable Development Goal for Water (SDG6).

Investors, through dialogues and, in some cases, shareholder resolutions and other strategies, are making progress working with companies on taking important steps, such as conducting water risk assessments in their supply chains and developing strategies to act on this critical information. Managing water risks in their supply chains is critical because they make up a significant portion of where companies depend on and have an impact on water.

Cliff:  How are you gauging companies’ progress?

Kristen: Ceres’ recently released benchmark report assesses how the 72 focus companies are performing against the Corporate Expectations. It is an important resource for investors as they continue to engage with companies because it provides more context around companies’ water stewardship efforts—where they are excelling, where they are lacking, and how they can accelerate or expand their efforts.

The analysis, which we developed using publicly available company disclosures, offers a snapshot of where each company is on its water stewardship journey. No company is leading the way or close to meeting the Corporate Expectations lined out by investors, but we were encouraged to see 11 of the 72 companies making substantial progress. However, with only seven years until 2030, there is significant work ahead for most of the companies we assessed.

Cliff:  How can companies step up their actions in the face of worsening water scarcity and pollution and related financial risks?

Kristen: Results vary by company and industry, but our research highlighted key areas for improvement. For example, many companies are using less water, but they need to make similar progress in addressing the impact their operations and their suppliers’ operations have on polluting water. This will help them bridge other gaps, such as protecting the ecosystems that are vital to freshwater supplies and ensuring that the communities where they operate and source commodities from have clean water.

Most companies can also do better ensuring that their public policy activities support sustainable water management. Advocating around water issues with governments, businesses, and civil societies can strengthen and broaden companies’ water stewardship efforts and impacts.

Many companies have made notable strides. They are demonstrating innovative and effective water solutions, including working with other stakeholders to address shared water challenges. Peers can learn from these examples in building their own water management strategies.

Cliff:  How can investors accelerate action?

Kristen: In our discussions with investors, they have said they will look to companies to implement and advance leading practices, starting with risk assessments of their entire value chains and setting targets that home in on high-risk watersheds. Investors will also consider whether companies’ boards and senior leadership oversee water management strategies and integrate water risks and opportunities into strategic business planning for direct operations and supply chains.

Companies must take a leading role in tackling water risks impacting global water resources and economic security. Investors can fuel progress by taking an active ownership approach and using their power of influence to urge companies to understand their water vulnerabilities and take deliberate steps to avert financial fallout from the unfolding water crisis.

About Kristen:

Kirsten James directs Ceres’ strategy for mobilizing leading investors and companies to address the sustainability risks facing our freshwater and agriculture systems. Her work includes leading the Valuing Water Finance Initiative, an investor-led effort which seeks to drive corporate action on water-related financial risks. Previously, Kirsten served for five years as the director of California policy and partnerships at Ceres.

Prior to Ceres, Kirsten worked for nine years at a regional water resource-focused NGO, as their Science and Policy Director. She graduated with a bachelor’s degree from Northwestern University and a master’s degree in environmental science and management from the Bren School at University of California Santa Barbara.

This article was originally published by GreenMoney in April 2024 as part of the “The Future of Water: Impacting Businesses and Communities” issue.