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Water risk database backed by big U.S. companies

Ed Crooks is energy editor at The Financial Times

A consortium of large U.S. companies including General Electric, Goldman Sachs, Coca-Cola and Dow Chemical is backing a new initiative to help manage water supplies in regions threatened by shortages, reflecting growing concern about the importance of water to businesses.

The Aqueduct Alliance, backed by seven large U.S. companies and the World Resources Institute, an environmental campaign group, is launching a new database showing water availability at a local level.

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The database, which will be available to everyone, is intended to inform investment and planning decisions by businesses and governments, for example, by warning them that a plant might not be able to source the water it needs.

It will also enable investors to assess companies' exposure to water risk.

Coca-Cola, the soft drinks group, has handed to the new alliance its own proprietary data on water availability, collected over years of research, making it open for general use. "Water is the lifeblood of our business," said Joe Rozza, the group's manager of water resources sustainability.

"Doing everything we can to put the fullest possible information about water supplies in front of strategic decision-makers in business, the public sector and non-governmental organisations is infinitely more valuable than anything we could make from selling the data. And it's the right thing to do."

Droughts this year in regions such as the southern U.S. and in the Yangtze river basin in China, have highlighted the threats water shortages pose to industrial production, oil and gas extraction and power generation as well as agriculture.

Kirsty Jenkinson of the WRI said: "Companies see the need to get better visibility about water if they are going to have to access it for their business. [With this database], they can see if they are at risk of not getting the water they need, or coming into conflict with other users of that water."

Kyung-Ah Park, managing director of the environmental markets group at Goldman Sachs, said financial investors were also beginning to take account of water risk in their decisions.

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"If you have two companies, A and B, and A has more plants in higher risk areas, then investors will be able to see that and may choose to invest in B instead," she said.

Groups such as GE that provide water management products and services expect pressure on water supplies to drive demand for their businesses.

The Aqueduct database is initially being published for the Yellow River basin in China, to be followed by four more areas: the Colorado river in the U.S., the Yangtze in China, the Orange-Senqu basin in southern Africa and the Murray-Darling basin in Australia.

It will then be expanded to cover other regions around the world.

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