Liquid Capital

Liquid capital: how investors should tackle the water crisis January 2023 Water is essential to life – it is also sometimes a threat to life. With both droughts and 昀氀oods likely to increase as temperatures and global populations rise, signi昀椀cant work is needed to mitigate and adapt to these risks. We expect investors to intensify their focus on water – whether they are screening portfolios for water risks or identifying the providers of possible solutions to the water crisis. Mélissa Bourassi Sustainability Analyst Key takeaways – In 2022, some of the most extreme water events in history – both in terms of droughts and 昀氀oods – hit the headlines. – Water is increasingly being recognised as a prominent physical risk, with significant economic and social costs. – Water security touches on many environmental and social sustainability goals, including all the 17 UN Sustainable Development Goal targets. – Water-related risk and opportunity screening is likely to escalate significantly in 2023. Guirec Thouement Sustainability Analyst Water is not only essential for human life but This paper addresses the importance of also for the global economy. Yet this seemingly understanding the full extent of the planetary, abundant resource is under threat. Most of the social and economic implications of water as a water on Earth is unfit for human consumption or resource and the role investors can play in locked in glaciers. Only 1% of water resources are mitigating risks and providing solutions. 1 available as freshwater. In addition, water Water security is targeted by Goal 6 of the UN remains unevenly distributed across the planet. Sustainable Development Goals (SDGs) that aims As a result, billions of people are living without to ensure access to clean water and sanitation for safely managed water and sanitation. It is all by 2030. Despite some recent progress, we are estimated that half the world will live under still far from reaching this goal, which intersects water-stressed conditions by 2050 unless we with other SDG goals such as poverty reduction, adopt an integrated and inclusive approach to food security and human health. In addition, the restore the balance.2 increasing global water crisis poses potentially significant financial risks: a recent study showed that water-related natural disasters could hit global GDP by USD 5.6 trillion by 2050.3 1 WWF, 2022, Freshwater 2 MIT Joint Program on the Science and Policy of Global Change 2021, Global Change, 2021 Outlook 3 GHD, 2022, Aquanomics: The economics of water risk and future resiliency