A framework for 21st century water risk management

Water management, together with other environmental, social and governance factors, is at the core of business and needs to be considered by capital markets. Water risks can be financially material and their management can enhance long-term, sustainable company value.

Launched in 2011, the Aqua Gauge is the outcome of a collaboration between Ceres, WBCSD, Irbaris and the IRRC Institute provides a robust framework and methodology for corporate sustainability professionals to engage with institutional investors on water risk and opportunity management, and a resource to inform companies of their shareholders disclosure needs.

Backed by investors managing over $2 trillion in assets, the framework benefited from a wide consultation involving representatives from over 50 financial institutions, companies, conservation groups, and other organizations active on water-related issues.

What is it?

The Aqua Gauge is a flexible Excel-based tool and associated methodology that provides companies with a complete picture of leading practice in water management, and a means to assess their own performance and progress. Leading practices are defined and grouped around four broad types of activity:

  • Measurement
  • Governance and management
  • Stakeholder engagement
  • Disclosure

Best practices are also distinguished by level of maturity from initial steps to leading practice through advanced progress helping companies communicate where they stand on the water stewardship journey.

The Aqua Gauge is neither a survey nor another channel of corporate disclosure. It adds to, and builds on, the tools and initiatives already available to companies and investors.

Who is it for?

  • Corporations in water-intensive sectors seeking to engage the investment community and to develop more robust water management strategies.
  • Portfolio managers and analysts seeking to better understand and mitigate potential exposure to water-related risks in their equity portfolios.
  • Corporate governance specialists at pension funds and asset management firms interested in engaging portfolio companies on how they are managing water-related risks and opportunities.
  • Investment advisors that provide services to asset owners seeking to integrate consideration of water and other sustainability risks and opportunities into their investment strategies.
  • Financial & ESG data providers interested in providing their clients with more robust analytics related to corporate management of water risks and opportunities.

Structure of the report

  • Chapter 1 identifies key global water trends that may pose potentially material risks to the financial health of companies and investment portfolios, and discusses the state of both corporate and investor response to these issues to date.
  • Chapter 2 describes the Ceres Aqua Gauge tool and how it can be applied in assessing the water management of individual companies.
  • Chapter 3 identifies the key challenges facing corporate managers with respect to water, and details four categories of corporate activities – measurement, governance & management, stakeholder engagement and disclosure – comprising a comprehensive approach to addressing water risks and opportunities.
  • Chapter 4 lays out a process to help investors prioritize those holdings more likely to face water-related risk based on their sector and geographic exposure.
  • Appendix A provides the complete details of the Aqua Gauge parameters for defining leading practice in water management.
  • Appendix B details relevant third-party resources, data sets and tools for companies and investors and provides a short glossary of relevant water-related terms.

For questions, suggestions, feedback write to Julie Oesterlé, oesterle@wbcsd.org.

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