Do You Have a Water Leak in Your Portfolio?
How water can damage businesses and profit margins
If you are a homeowner, perhaps you’ve thought about the risk of flooding or water damage to your home, but for most of us, water isn’t a risk we readily think about. However, with water being the single thing that we need to survive on a day to day basis, it’s something we foolishly ignore.
According to the UN, the demand for water worldwide will be 40% greater than its supply in 2030, and that’s bad news for us all — especially those of us that are flushing perfectly good drinking water down our toilets 10 times a day.
As well as the risk to ourselves, water can massively damage investments. One survey by CDP found that the majority of listed companies faced combined $40 billion in water-related losses in 2018 alone. Floods, hurricanes, droughts and pollution can cause massive damage to businesses. Business as usual one day can drastically change tomorrow, especially in difficult terrains. Coca-Cola has had to close plants in India due to local droughts causing lack of available water.
S&P Global Trucost, suggests that if major corporations paid the true cost of water, based on the price due to scarcity, then their profit margins would shrink overnight. Many others would have to shut down, as their businesses could no longer afford to run. Companies that have already run the calculations have sprung up to offer advice for investors. Aquantix, a Canadian based AI business has already modelled potential risks for many businesses, using a range of satellite imagery, weather reports and online data, to give a financial impact report of water damage.
Water is one of the world’s most important resources, and yet we plunder it in so many stupid ways on a daily basis. It’s time we start looking at our investments to see how affected they are by water, especially if demand will soon outstrip supply.
Disclaimer
This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.
