Sustainability firm Ceres has released a framework for investors and companies to be able to assess the value of their water-related activities across their portfolios and operations.
The company-level cost-benefit analysis framework has been created with consultancy Bluerisk and applies publicly available information to different scenarios at companies.
For example, at an apparel company the framework looked at the value of whether the company engaged in collective action, which it found had a positive return on investment. It then looked at which parts of the company’s value chain could deliver the best benefits, which it found to be those “upstream” of the company’s direct operations.
“Being able to quantify the business opportunities for engaging in water stewardship is essential to unlocking internal funding to support water intervention strategies,” said Paul Reig, founder of Bluerisk and co-author of the analysis.
By estimating the cost of solutions, and potential business and societal benefits of water management strategies, the framework looks to go further than those that assess only water-related risks at businesses.
The authors hope this will be a useful tool for investors to then assess those companies.
“The more we understand a company’s financial position when it comes to water risk and opportunities, the more informed our dialogues with those companies will be,” said Marc-Olivier Buffle, head of thematic client portfolio managers and research at Pictet Asset Management.
“Knowing the full value of water stewardship investments can also empower investors to optimize portfolios of investments for both business returns and societal impact.”