The European Sustainable Finance Disclosure Regulation (SFDR) aims to facilitate transparency and standardisation, and amongst other things, covers environmental reporting whereby water features in seven specific reporting metrics . One improvement that should follow from the increasing pressure and scrutiny on the reporting, is better water disclosures over time, as we’ve seen with climate, and recently biodiversity, while highlighting the connectivity between these issues. Increased disclosure and awareness around these risks will hopefully result in improved decision making.
The impact of water is starting to get noticed. Reports  are highlighting that existing investment frameworks focus primarily on water quantity and do not put adequate focus on water quality and pollution, or the ‘net’ water impact of investments. The role of water stewardship and the engagement of investors remain critical to improve (investment) outcomes. Impact Assessment Management’s Water Report, in conjunction with the Swedish pension fund, AP7, concludes that there is currently not enough publicly available information for investors to assess the impacts of their investments on water availability and management, making it difficult to accurately assess water-related risks.
That said, it’s not all bad news. As the materiality of water issues are better understood, there are a number of investment opportunities too, particularly as they pertain to water intensive industries and technical solutions or part of the broader low carbon transition efforts and biodiversity considerations.