Worries Build Among Investors Over Oil and Gas Industry’s Exposure to Water and Climate Risks
When it comes to financial risks surrounding water, there is one industry that, according to a new report, is both among the most exposed to these risks and the least transparent to investors about them: the oil and gas industry.
This year, 1,073 of the world’s largest publicly listed companies faced requests from institutional investors concerned about the companies’ vulnerability to water-related risks that they disclose their plans for adapting and responding to issues like drought or water shortages.
Many of those companies responded by reporting their information to a group called CDP, which works with over 800 institutional investors with assets of US$95 trillion to push for corporate transparency. But in the oil and gas industry, the compliance rate was just over half the average, with only 22% of companies providing information, CDP reported.
That’s a concern for investors, CDP wrote, because their data showed that roughly two thirds of oil and gas companies say they are vulnerable to water risks — and those risks are not just speculative risks to keep an eye on for some future time.
Nearly half of the oil and gas companies who responded report that their bottom line has already suffered due to “water-related challenges” over the past year, placing the industry in the ranks of the most vulnerable, the CDP reported.
“Just as oil was to the 20th century, water is fast becoming the defining resource of the 21st century,” said Cate Lamb, head of water at CDP. “Unfortunately however, unlike oil, there is no replacement for water.”
The growing risks of unaddressed climate change are beginning to draw the attention of the financial community, with investors, central bankers and global economic institutions increasingly questioning what impacts shifting weather patterns might have on business as we know it.
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