Industry – from food production to mining, apparel manufacturing to high-tech – is collectively the single largest user and influencer of freshwater resources globally. Therefore, it has much to lose from critical water risks as population pressures and climate risks grow. How industry responds to intensifying water scarcity and water quality risks globally will be critical to its long-term future and society at large.
Against this backdrop, Ceres, in partnership with the Valuing Water Finance Initiative, commissioned the Global Institute of Water Security at the University of Saskatchewan for a first-of- its-kind comprehensive scientific review and analysis of industry impacts on freshwater resources around the world. This report analyzes the global role and impacts that industries are having on water systems, including their impact on water use, pollution, water flow alterations, and broader hydrologic system disruption. It also examines the long-term exposure that different industry sectors are facing from escalating water risks and the actions that companies can take to mitigate those risks.
Through this comprehensive analysis of the scientific literature, the report identifies five critical threats to global freshwater systems - groundwater depletion, metals contamination, plastic pollution, diversion and transfer of water, and eutrophication – threats driven primarily by industry practices.
The analysis makes clear that key industries, including Food Products, Textiles, and High Tech and Electronics, are the biggest contributors to these problems, which are under- mining the functioning of global freshwater systems that underpin economic and societal stability.
This analysis demonstrates that these threats are not only locally severe, but are widespread, posing broader systemic risks to the global economy and to investment portfolios than have been commonly acknowledged. The degree to which corporate practices are triggering these severe and systemic impacts exposes companies and their investors to far-reaching financial risks, as several studies reviewed in the report show. A recent Barclays’ research note warned that the Consumer Staples sector alone, which includes food and beverage production, is facing a potential $200 billion impact from water scarcity risks —roughly three times higher than carbon-related risks.
This report outlines the important role investors can play in engaging with companies and the industries that they invest in to halt the systemic harm these sectors are causing.
Given that climate change is accelerating these risks, time is running out to protect the Earth’s most precious natural resource. The report concludes that it will be impossible to advance global water security without far stronger private sector leadership – both from companies and the investors owning them. Concerted and focused efforts of investors, companies, and governments to drive change in these unsustainable practices would make a significant positive impact to protect global water security, economic development, and the lives of millions.