Industries with greatest impact on water resources named in new investor tool

The apparel and textile manufacturing sector, cotton farming, livestock farming, oil and gas extraction and mining sectors have the largest potential impact on water resources, according to a new tool developed by environmental disclosure platform CDP.

(Photo - GomezDavid, via Getty)Cotton farming is one of the sectors with the largest potential impact on water resources, according to CDP (Photo - GomezDavid, via Getty) (Photo - GomezDavid, via Getty)Cotton farming is one of the sectors with the largest potential impact on water resources, according to CDP (Photo - GomezDavid, via Getty)

Launched today, the CDP’s Water Impact Index measures the potential impact on water quality and quantity of over 200 industrial activities. The tool can be used by investors and financial institutions to assess the potential impact of their portfolios on water resources and water security. It can also be used by companies to assess the potential water impact of different parts of their business and value chains.

Finance also emerges as a sector having a critical impact on the world’s rivers, lakes, aquifers and streams, according to the CDP.

“The flow of money from banks, insurers and asset managers into high impact companies is enabling agribusinesses to pump ever increasing amounts of non-renewable groundwater, it is enabling tailings dams to be constructed at the heads of free-flowing rivers and it is enabling chemical, apparel and pharmaceutical companies to release toxic pollution, much of which is carcinogenic, posing a real and present danger to human health,” the CDP said.

CDP’s analysis finds that some of the world’s largest companies in the most impactful sectors have consistently failed to disclose their water-related data to investors. 

CDP says its tool is the first of its kind that allows financial institutions to understand the relative impact of different industrial activities on the world’s water resources. In doing so, the tool fills a critical data gap in the efforts of financial institutions to understand and address their exposure to water risk.

Cate Lamb, global director of water security at CDP, said: “Achieving a water secure, net zero future will require a complete transformation of our global economy and urgent action is needed. To succeed, companies responsible for the greatest impacts on water resources must transform their business models, products and practices in ways that decouple production and consumption from the depletion of water resources.”