Kirsten James, Senior Program Director of Water, Ceres, says corporates and investors can work together to deliver net-positive outcomes in water-stressed regions.
With the world’s ecosystems deteriorating at a disastrous pace, governments from around the world convened last month in Montreal for the UN Conference on Biodiversity (COP15) to reach a historic deal to protect the world’s fragile ecosystems. Throughout the two weeks of intense negotiations, many stakeholders made the point that saving nature cannot occur without protecting the world’s vital water resources.
Importantly, the resulting Global Biodiversity Framework includes ambitious targets that speak directly to this, including targets to: 1) restore at least 30% of degraded ecosystems, including those sustained by inland freshwater sources, by 2030; 2) conserve and manage at least 30% of important terrestrial, inland water, coastal, and marine areas by 2030; 3) reduce pollution risks and the negative impact of pollution to levels not harmful to ecosystems by 2030 and; 4) restore, maintain and enhance nature’s contributions to communities, including ecosystem functions that regulate air, water, climate, soil health, and pollination, and reduce disease risk and protect against natural disasters.
Water is life
Simply put, water is life. Rivers, lakes, and wetlands are among the most biodiverse places on earth, harboring almost a quarter of all vertebrate species, including over half of the world’s fish species. Yet, in just one example of how this critical biodiversity is under threat from human activities, one third of freshwater fish species face extinction due to threats including pollution and release of untreated waste, overuse of water for irrigation, and escalating impacts of climate change.
Just as ecosystems and species rely on clean water to thrive, freshwater supplies depend on healthy ecosystems. Nature provides a unique type of infrastructure for storing, filtering, and moving water. So, impacts to ecosystems through land use changes such as agriculture and industrialisation can affect water quantity and quality.
These impacts present a risk to corporations whose operations depend on freshwater and the services healthy ecosystems provide. Biodiversity loss and the pollution and depletion of freshwater is also a risk to investors who need these functioning systems in order to generate value for their clients.
So how can the private sector help mitigate this double-sided risk? The investor-led Valuing Water Finance Initiative makes the business case for action on water risk so companies recognise fresh water as the world’s most precious natural resource, essential to industries, communities, and ecosystems.
The initiative, launched in August in partnership with the Government of the Netherlands and the support of 64 investors managing US$9.8 trillion in assets, provides companies with a set of clear, science-based steps to prioritize water risk and opportunity. It also gives investors the resources and tools they need to engage with companies on taking measurable and implementable actions to reduce their impacts, including those on water-driven biodiversity loss.
A core expectation of the Valuing Water Finance Initiative is that companies do not negatively impact water availability in water-scarce areas across their value chain. Some companies are making strong commitments and taking steps to use water more wisely.
Water-resilient value chains
To help meet its goals for achieving a water-resilient value chain and net-positive water impact in water-stressed regions, apparel retailer Gap Inc. has implemented innovative partnerships such as one with Arvind Limited, a textile manufacturer based in India. Through this partnership, an Arvind denim manufacturing facility operates fully with reclaimed water, saving an estimated two billion litres of freshwater annually.
Food and beverage multinational PepsiCo aims to have seven million acres—approximately equal to 100% of land used to grow key crops and ingredients for its products—adopt regenerative agriculture by 2030. The company will spread regenerative farming techniques that improve and restore ecosystems by building soil health, reducing carbon emissions, enhancing watershed management, increasing biodiversity, and improving farmer livelihoods.
Another core expectation of the Valuing Water Finance Initiative is for companies to protect and restore watersheds. We already see this as a water stewardship practice for some companies. French foods producer Danone, for example, has committed to developing preservation or restoration plans by 2030 for the 55 watersheds located in the water-stressed areas where it operates. Danone’s work includes a project in Indonesia’s threatened Rejoso watershed where, with its Ecosystem Fund and the World Agroforestry Centre (ICRAF), it’s applying nature-based solutions to improve water conditions, mitigate flood risks, and minimise erosion.
Driving corporate action
A group of investors took another important step at COP15, announcing the formation of a new global investor-led engagement initiative—Nature Action 100—which aims to drive corporate action on nature and biodiversity loss. Given their complementary nature, the Nature Action 100 Secretariat—led by Ceres and the Institutional Investors Group on Climate Change (IIGCC)—will closely coordinate with the Valuing Water Finance Initiative to ensure alignment between the initiatives.
We are facing an existential and multi-faceted threat to our freshwater resources and the ecosystems they both support and depend upon. The crisis is a systemic, far-reaching, financial risk to nearly all economies. Companies can address deteriorating biodiversity by addressing the global water crisis.
Water and ecosystem outcomes can be achieved by implementing corporate water strategies that respond to local shared water challenges and stakeholder priorities in a watershed. Investors in the Valuing water Finance Initiative are ready to work with companies, providing clear, action steps for them to become better water stewards, ensuring sustainable water supplies and protecting ecosystems for generations to come.