In 2018, the first Water Benchmark for financial institutions was developed and carried out by the Water Footprint Network (WFN) in the Netherlands, which is a leading international knowledge partner. On the basis of the water footprint concept, three dimensions were distilled and used in the Water Benchmark, to describe the water sustainability of investment decisions. These dimensions are: efficient allocation, sustainable scale and fair distribution. Efficient allocation revolves around the efficient use of water in the production process, and investigates whether an investment does not unnecessarily waste or contaminate water; sustainable scale compares the total of all water users in the region with ecological ceiling values and analyzes the share of the investment in the total local water use and the possible scarcity that this creates; and the fair distribution criterion provides insight into how the investment usage relates to other users, and asks if the investment does not claim a disproportionate part of the limited available water. More than 50 criteria / questions describe these three sustainability dimensions in both direct operations and the supply chains of investments. Scores are awarded based on the study of publicly available sources and reports released by the financial institutions themselves. The scores describe the degree of sustainable use of water by the companies that are invested in by the rated investor.
The results showed that water sustainability is a blind spot to investors, resulting in disclosed policies being neither well-demarcated nor clearly formulated, especially regarding the supply chain of the activities invested in.
In 2021, WFN together with Water Footprint Implementation have reapplied the assessment framework to the same 20 Dutch large investors with the intent of uncovering trends in the financial sector’s consideration of physical, regulatory, or reputational risk posed by water. We are excited to show who rose and who fell in the rankings and we expect both the water and the financial sector are curious too.
Source: Dobrescu, I. (Water Footprint Implementation). 2021. Water Benchmark for Financial Institutions. Data-driven pathways to approach water-related disasters and challenges, Risk & Resilience. AIWW 2021.
In-person Conference
Source: YouTube - Water Benchmark for Financial Institutions