From edie news

The index accounts for the water impact of each industrial activity across the whole value chain; for fashion, for example, cotton and livestock farming, fossil fuel extraction for synthetics production, manufacturing and dyeing are all accounted for. It also covers impacts on both water quantity and quality.

Each industrial activity is given a score from zero to 18, with zero being the lowest water impact and 18 being the highest. Scores of 15 to 18 mean the activity is deemed as having a ‘critical’ impact.

Apparel design and manufacturing received a score of 18 and textiles received 16. All activities related to fossil fuel extraction and processing received ‘critical’ impact scores, as did all activities relating to metal mining, smelting, refining and forming. Other sectors with a high portion of ‘critical’ scores included chemicals and agri-food.

Asset management received a score of 18, in recognition of the fact that many firms are investing in other high-risk activities, often without environmental conditions. The hope is for investors to use the index to assess the potential impact of their portfolios on the world’s water systems, leading to better-informed decisions on client engagement and divestment.

CDP said in a statement: “The flow of money from banks, insurers and asset managers into high impact companies is enabling agribusinesses to pump ever-increasing amounts of non-renewable groundwater, it is enabling tailings dams to be constructed at the heads of free-flowing rivers and it is enabling chemical, apparel and pharmaceutical companies to release toxic pollution, much of which is carcinogenic, posing a real and present danger to human health.”

Investors could also use the impact index to press companies that have continually failed to disclose information about their water footprint to do so. CDP has named and shamed several companies which fall within the ‘critical’ categories on the index but have failed to disclose this information through its platform for more than ten years, including Chevron, Royal Dutch Shell and ExxonMobil.

“Achieving a water-secure, net-zero future will require a complete transformation of our global economy and urgent action is needed,” CDP’s global director of water security Cate Lamb said.

“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.”

Previous research from CDP, published this March, concluded that $301bn of business value is at risk because of water stewardship challenges, across around 2,900 large companies. Yet, it would cost these corporations around one-fifth of this sum to deliver appropriate mitigation and adaptation initiatives.

Read more at CDP