Watching water: a guide to evaluating corporate risks in a thirsty world
A scarcity of clean, fresh water presents increasing risks to companies in many countries and many economic sectors. These risks are difficult for investors to assess, due both to poor information about the underlying supply conditions and to fragmentary or inadequate reporting by individual companies. As a result, market prices of securities are unlikely to accurately reflect the potential costs of water-related problems.
JPMorgan Global Environmental, Social, and Governance Research has released a report that offers investors a framework for evaluating the impact of water scarcity and water pollution on individual sectors and companies. This is the first of a series of reports planned on transformational issues that investor clients and corporate managements over the course of 2008.
This report draws on the expertise of the World Resources Institute, which has helped provide an overview of the issues from a global perspective. JPMorgan equity analysts from around the world lay out the water-related risks and opportunities they see facing companies in specific sectors. The report provides criteria for examining these issues, which will be of use to companies seeking to improve communication with investors about environmental issues as well as to investors themselves.
Here are the main points:
Exposure to water scarcity and pollution is not limited to onsite production processes, and may actually be greater in companies’ supply chains than in their own operations.
The power-generation, mining, semiconductor manufacturing, and food and beverage sectors are particularly exposed to waterrelated risks.
Corporate disclosure of water-related risks is seriously inadequate and is typically included in environmental statements prepared for public relations purposes rather than in the regulatory filings on which most inestors rely.
The report recommends that investors assess the reliance of their portfolios on water resources and their vulnerability to problems of water availability and pollution.
Watching water: a guide to evaluating corporate risks in a thirsty world by JP Morgan Securities, Piet Klop, Fred Wellington, Courtesy of World Resources Institute WRI originally published Apr. 2008, is available for download here.
JPMorgan Global Environmental, Social, and Governance Research has released a report that offers investors a framework for evaluating the impact of water scarcity and water pollution on individual sectors and companies. This is the first of a series of reports planned on transformational issues that investor clients and corporate managements over the course of 2008.
This report draws on the expertise of the World Resources Institute, which has helped provide an overview of the issues from a global perspective. JPMorgan equity analysts from around the world lay out the water-related risks and opportunities they see facing companies in specific sectors. The report provides criteria for examining these issues, which will be of use to companies seeking to improve communication with investors about environmental issues as well as to investors themselves.
Here are the main points:
Exposure to water scarcity and pollution is not limited to onsite production processes, and may actually be greater in companies’ supply chains than in their own operations.
The power-generation, mining, semiconductor manufacturing, and food and beverage sectors are particularly exposed to waterrelated risks.
Corporate disclosure of water-related risks is seriously inadequate and is typically included in environmental statements prepared for public relations purposes rather than in the regulatory filings on which most inestors rely.
The report recommends that investors assess the reliance of their portfolios on water resources and their vulnerability to problems of water availability and pollution.
Watching water: a guide to evaluating corporate risks in a thirsty world by JP Morgan Securities, Piet Klop, Fred Wellington, Courtesy of World Resources Institute WRI originally published Apr. 2008, is available for download here.
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