The financial community needs to be better engaged on water risks, according to one of the world’s largest suppliers of water services.
Johann Clere, global shared value director at French firm Veolia Water, said that the water industry needs to be more financially appealing to cash-strapped businesses looking for profit maximisation.
“We need the financial community and investors to better value water”, said Clere, speaking to Blue & Green Tomorrow at Water Risk and Finance – an event put on by Environmental Finance on Thursday.
“If you want to mitigate risk on water, maybe you can reuse it? There is the technology today to transform waste water back into the process.
“If you take $1 per cubic metre of water, the payback might be 14-16 years. The chief financial officer and the investor will say that the return on the investment is too long.
“That’s why we need to monetise the risk today and if you integrate the true cost of water, then it makes business sense to invest.”
Water is a relatively cheap commodity for companies, but when it comes to shortages and flooding, or reputational damage due to water conflicts, it can pose significant risks.
Clere said that by 2050, around 70% of global GDP will be produced in water scarce areas. With external factors such as climate change amplifying flooding and droughts, it’s important therefore that businesses recognise and act upon these risks posed by water.
Clere added, “Resilience is something we need to look carefully at. But water management, I would say, is easier than carbon because it’s already happening.
“Carbon is just at the beginning and is something that’s perhaps not so tangible to handle.
“With water, we’ve got endless examples of water impacting the bottom line of some of the bigger players.”
Also at the Environmental Finance event, Piet Klop, senior adviser for responsible investment at PGGM Investments, said ranking multinational companies on their water usage and efficiency would go a long way to driving change and reducing their water footprints.