Stockholm (NordSIP) – Water risk continues to be neglected by many large investors according to a recent CDP report that highlights the potential impact on global GDP should urgent remedial action not be taken. There is renewed attention therefore on the 2024 iteration of World Water Week, a global event organised annually by non-profit the Stockholm International Water Institute (SIWI) since 1991. The event runs from 25 to 29 August with attendance either online or onsite in Stockholm.
As well as being an essential resource in manufacturing, energy generation, and the digital economy, water is considered a key factor in almost all the Sustainable Development Goals (SDGs). The theme chosen for this year’s World Water Week is “Bridging Borders: Water for a Peaceful and Sustainable Future.” The conference organisers want to emphasise the link between access to water and global peace and security. In defining the theme SIWI sought to highlight the need for international cooperation, given that more than half the world’s population lives within river basins that straddle several national borders. Unfortunately, an escalation in the number of conflicts around the globe has often led to a more protectionist approach to water management. The conference will therefore seek ways to overcome this destructive trend and understand the complex relationships at play.
The multiple benefits of water diplomacy
Climate change is also seen as a ‘risk multiplier’ when it comes to water scarcity and water-related disasters within politically volatile areas. SIWI would like the conference to explore ways of reversing that situation through ‘water diplomacy’ that facilitates joint action towards greater climate resilience, which in turn would have the added benefit of building mutual trust between previously antagonistic communities. Commenting on the complex interplay between water scarcity and political conflicts, Jon Lane, chair of the World Water Week’s Scientific Programme Committee said: “Improved water management and cooperation over water will lead to increased security, collaboration and mutual understanding, and therefore peace. For any achievements and improvements to become sustainable, one of the prerequisites is the ability to maintain peace.”
From an institutional investor perspective, World Water Week provides an opportunity to reevaluate water-related risk across portfolio companies. The Kunming-Montreal Global Biodiversity Framework adopted at COP16 in December 2022 provided the impetus for investors to begin measuring and eventually mitigating nature-related financial risk. According to CDP, water represents the dominant component of this type of risk, with scenario-based research by the Network for Greening the Financial System (NGFS) indicating that it may constitute 7-9% of global GDP at risk.
Examples of the breadth of water’s impact on the global economy include the major technology firms’ ever increasing need for data centre water cooling, the insurance industry’s exposure to water-related disasters and companies’ reputational and litigation risk associated with pollution incidents. New research published by Planet Tracker reveals that a third of data centres in the United States are located in areas of high or extremely high water stress.
