Three major financial institutions and two of the world’s largest food and beverage companies are driving improved water management using data from Aqueduct’s Water Risk Atlas. This list includes: Anheuser-Busch InBev, the leading global brewer; Nestlé, the world’s largest food and beverage company; LGIM, one of Europe’s largest institutional asset managers; one of the world’s largest banks; and one of the world’s largest pension fund managers.
Water risks—such as floods, drought, and increased competition for scarce water resources—are increasingly chipping into corporate bottom lines. The financial sector is taking notice, as companies and investors seek robust and comprehensive data to inform their decision-making processes. Previously, water risk had not been widely incorporated into financial risk assessments or business strategies, primarily because of a lack of awareness of business vulnerability to water risks, poor data, and uncertainty on how to use what information was available.
In January 2013, WRI launched the Aqueduct Water Risk Atlas, a comprehensive water risk mapping tool that highlights water risk hotspots for a company’s direct operations and supply chains. Using a scientific approach, the tool is transparent, robust, and is translated into a set of easy-to-use water risk indicators and maps. Within six months from launch, the uptake of Aqueduct’s data by investors and companies has steadily increased, as has use by governments, academic, and civil society groups.
Some of the world’s biggest global companies, funds, and investors are driving improved local water management, thanks Aqueduct’s information. Investors like LGIM are increasingly using Aqueduct water risk data to inform investment decisions, and multinational industry leaders like Nestlé and AB InBev are adopting Aqueduct’s Water Risk Atlas as a critical component of their corporate water strategies. The popularity of the Aqueduct tool provides strong evidence that:
The investment community’s water-related risk awareness is growing;
Investors can become key drivers for improved corporate water management worldwide; and
Major multinational companies are incorporating water into business strategies to drive action on the ground and reduce shared water risks in watersheds.
One of the biggest successes from 2009’s COP 15 conference was securing funding for climate change adaptation and mitigation in developing countries. Donor nations agreed to “provide new and additional resources […] approaching $30 billion for the period 2010–2012, with balanced allocation between adaptation and mitigation.” They also committed to mobilize $100 billion a year by 2020.
But the agreement left a key question unresolved: how should funding be “balanced” between adaptation and mitigation? Should the funding balance be 50/50 between adaptation and mitigation or should it based on each country’s needs? Should funding include both private and public sector investment? These are some of the questions that negotiators will need to address during COP 19 in Warsaw.
But whatever they decide as being a “balanced commitment,” one thing is clear: finance for adaptation needs to increase in the coming years.
GENEVA/WASHINGTON – Many financial institutions measure and report their own greenhouse gas emissions, but the real impact is in their value chains. In 2013, only six percent of financial companies in the FTSE Global 500 reported any emissions associated with lending and investment to CDP.
With a lending portfolio of $18 billion in 2010, the International Finance Corporation (IFC) promotes private investment in developing countries. Its lending has been guided since 2006 by a set of Performance Standards on Environmental and Social Sustainability which the IFC applies to all investment projects to minimize their impact on the environment and on affected communities. Large-scale infrastructure projects, extractive industries operations, and other projects often pose serious environmental and social risks, including to human rights.
Over the past decade, WRI has been leveraging its expertise on ecosystems and biodiversity, climate change, and governance to help shape the environmental and social policies of international financial institutions like the IFC, and to promote sustainable private investment in client countries.
WRI actively advised IFC on its 2011 revision of the IFC performance standards which strengthened the environmental and social safeguards it applies to projects worldwide. IFC staff making a case for robust requirements to assess risks on ecosystem services, climate change, and indigenous peoples’ rights, also had access to the following WRI body of work:
Our effort to mainstream ecosystem services in decision-making and the documented use of our ecosystem services review tools within the private sector.
Our work demonstrating that the concept of “Free Prior Informed Consent” makes a good business case for large-scale, high-impact projects to ensure local civil society buy in.
IFC standards are globally influential among international project financiers seeking to manage the environmental and social risks of projects in the developing world. More than 60 leading international institutions have committed to adhere to IFC’s Performance Standards in their project-finance lending under the rubric of the Equator Principles. Banks in emerging economies including China and Brazil often refer to the IFC Performance Standards as they develop national environmental and social guidelines.
This fact sheet updates a May 2012 working paper on the U.S. fast-start finance (FSF) contribution over the 2010-2012 period. It analyzes the financial instruments involved in the U.S. self-reported portfolio—about $7.5 billion, or 20 percent of the total FSF commitment globally. It also...
by Taryn Fransen, Abigail Jones, Michael Wolosin and Smita Nakhooda - April 2013
BNDES is Brazil’s key financial institution for domestic long-term financing, and it’s one of the main financial engines behind Brazil’s take-off as a leading Latin American economy. Its lending and equity investments are becoming increasingly important internationally.
A Primer on Public Climate Financing Instruments Used to Leverage Private Capital
Targeting public finance to leverage private sector capital can help meet the several hundred billion dollars of annual low-carbon investment required in developing countries. This working paper serves as a primer, demonstrating how the public sector can employ different types of public...