EcoLab and Trucost on Wednesday launched a free new tool to help companies assess water-related risks in financial terms and enable more informed decision-making.
The Water Risk Monetizer is the first financial modeling tool that enables businesses to factor water into decisions that support business growth and help ensure the availability of this limited natural resource for future generations. The tool provides actionable information to help businesses understand the impact of water scarcity to their operations and quantify those risks in financial terms.
Insufficient access to clean water can significantly disrupt operations, increase costs and curtail growth. Despite increasing risks to businesses and communities, the cost of water today in many regions of the world remains relatively low.
The tool helps bridge the gap between market price and risk by calculating a risk-adjusted price comprising forecasted future water costs in addition to a risk-based premium that represents the value that should be placed on water based on real and future water scarcity risks. The premium makes it easier to factor the potential cost or impact of water risks into business decisions in the same way other risks are considered in planning and capital allocation.
The information provided by the Water Risk Monetizer can be used by businesses around the world to better understand water risks and the potential cost implications of water scarcity for a particular facility, EcoLab and Trucost say. The data provides valuable information to help assess different business models, determine how water costs or scarcity may affect growth plans, help inform business goals and provide a catalyst for collaboration and stewardship for greater impact.
In March, WWF updated its Water Risk Filter, a free online tool that allows users to map production facilities, supply chains and commodities. The updated version of the website included data on more than 120 agricultural commodities — including cotton, palm oil and corn — making it the most sophisticated tool for tracking water risk exposure.
Two-thirds of the world's largest companies are reporting exposure to water risks, some of which have potential to limit growth, according to a new report by CDP. The report finds that 68 percent of businesses report exposure to water risk that could generate a substantive change in their business, operations or revenue. Some 22 percent of companies anticipate that issues around water could actually limit the growth of their business.
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Founder & Principal Consultant, Hower Impact
Mike Hower is the founder of Hower Impact — a boutique consultancy delivering best-in-class strategic communication advisory and support for corporate sustainability, ESG and climate tech.
Published Nov 6, 2014 7am EST / 4am PST / 12pm GMT / 1pm CET