A new report from investor network FAIRR Initiative warns that agri-food companies’ inability to manage water risks poses a significant and rising threat to asset owners. The briefing, released during World Water Week, found that only 19% of leading protein producers have set targets to reduce their exposure to water insecurity. Almost two thirds (62%) of the 60 global firms listed in the Coller FAIRR Protein Producer Index are failing to manage water-related risks effectively, it said.
The largest drivers of risk to firms and their investors are partial supply chain coverage of water dependencies and insufficient data to compare water withdrawals to financial benchmarks, FAIRR added. While ten livestock companies in the latest Index have set targets to reduce water withdrawals, most focus on improving efficiency, rather than cutting total water withdrawal. Only one livestock producer in the index disclosed all its feed sources from water-stressed areas, with seven reporting partial data.
Water scarcity is becoming an urgent and often overlooked threat to global food systems and financial markets. With approximately 60% of global GDP highly vulnerable to water availability, the lack of corporate targets to reduce their water demand is a growing concern. FAIRR’s analysis found that the cost of proactively addressing water risks is estimated to be five times lower than the financial impact of inaction, which is projected to cost companies across all sectors between US-300 billion.
FAIRR urged investors to demand better disclosure, standardise material metrics, and push for more ambitious and resilient targets from the companies in which they invest to protect long-term value.
