The term "water risk" refers to stresses on water resources that pose threats to society and business—as well as opportunities for competitive advantage through effective water risk management. The initiative’s centerpiece is the Water Risk Atlas, a publicly available interactive online mapping tool populated with proprietary data donated by the Coca-Cola Company on local-level stresses to water availability.
The Atlas advances sustainability by enabling companies, NGOs, academics, and public sector agencies to analyze and manage water-related risks and opportunities in the context of specific ecological and social impacts at the local and regional levels. This information empowers all parties to collaboratively strategize on how to mitigate and adapt to changes while minimizing adverse outcomes for businesses and the communities they operate in.
"Water risk is emerging as one of the greatest threats to long term economic and environmental sustainability," said Jeff Fulgham, Chief Sustainability Officer for GE Power & Water. "Our customers around the world are addressing physical, operational, regulatory, social & reputational, and financial risks all relative to water. Aqueduct will enable us to help our customers better assess and proactively address these risks."
The Aqueduct Alliance emerged to meet the rising demand from investors seeking information on how companies are managing water risk. According to a November 2011 survey by the Carbon Disclosure Project's Water Disclosure program, more than half (59 percent) of the 190 surveyed companies report exposure to water-related risks such as flooding, scarcity, and reputational damage. On the flip side, almost two-thirds (63 percent) of respondents identify water-related commercial opportunities, most of which (79 percent) are near term. The most commonly identified opportunities: cost reductions from increased water efficiency, revenue from new water-related products or services, and improved brand value.
The Water Risk Atlas enables companies and investors to analyze the water risks they face in granular detail with maps that aggregate and weigh indicators beyond just physical data (such as water supply) to capture local regulatory structures, and even potential reputational impacts.
"Robust risk assessment is the foundation for developing strategic water resource management plans at the business, watershed, and municipal levels," says WRI. "The maps generated by Aqueduct combine advanced hydrological data with geographically-specific indicators that capture the social, economic, and governance factors that affect companies and economies."
The Water Risk Atlas framework consists of three primary categories of water-related business risk:
Access and Growth Constraints: risks from increasing water scarcity;
Cost Risks: from deteriorating water quality, more stringent regulations, or increasing water prices;
Disruption Potential: risks from poor water governance, increasing competition for water resources, and social concern around water issues.
These categories are divided into nine subcategories, with a total of 21 indicators aggregated to determine the overall water risk.
When completed, the Atlas will include a global map for current and future water scarcity and water quality as well as detailed, multi-variable risk maps for the most water-stressed, economically significant river basins around the world, starting with the Yellow River Basin in northern China. Next up: the Colorado river in the US, the Yangtze in China, the Orange-Senqu basin in southern Africa and the Murray-Darling basin in Australia, according to theFinancial Times.
The Aqueduct Alliance, which added Bloomberg, Dow Chemical Company, Talisman Energy, and United Technologies as sponsors at the August launch, plans to develop an updated interactive web platform soon that encompasses global as well as basin-specific maps and information on water related risks.