INTHEBLACK November 2023 - Magazine - Page 30
F E AT U R E
Above: In June 2020, activists of Extinction Rebellion (XR) coloured
parts of the Spree River in Berlin with dye as part to draw attention
to the damage caused by coal mining to the environment.
Stranded
assets
Water risk is already stranding
assets across major sectors of
the global economy, according
to a CDP report commissioned
by the Swiss Federal Office for
the Environment.
Assets worth US$15.5 billion
(A$24.3 billion) have been
stranded or are at risk in the
coal, electric utilities, metals
and mining, and oil and
gas sectors.
“Water security is no longer
a small, plant-level operational
issue for companies, but has
become a strategic question
for senior management,” says
the report.
30 INTHEBLACK November 2023
The CDP analysis shows how the
top 20 financial firms have provided
US$2.5 trillion (A$4 trillion) in
bond, loan and equity financing to
some of the world’s most waterimpactful companies over the
past decade. The financial sector’s
exposure to “water-stranded”
assets can prompt knock-on events,
according to the report. These
include “non-delivery of product
to offtake partners and hedging
mismatches – an open liability;
make-good and clean-up liabilities
and fines; shareholder class actions;
and changes to loan funding
and wider financial relationships,
including banking and insurance”.
WATER POLITICS
In 2023, the UN Water Conference brought
together governments, not-for-profits and
businesses to find innovative ideas and seek
commitments to combat water scarcity,
pollution and the effects of climate change
on the global water supply.
Charles Iceland, from the World Resources
Institute, has praised the conference’s
scope and ambition. However, he says that
“many commitments lacked proper finance,
quantifiable targets and cross-border action
needed to overcome water challenges. Still
others failed to consider climate change or
address industry and agriculture, some of the
biggest water consumers.”
Getting nations to collaborate on water
management is rare due to conflicting
geopolitical, economic and social values of
countries across affected watersheds, says
Iceland. “Yet water is inherently a crossboundary, cross-sectoral issue, given its
many users.”
Another reason why governments can no
longer take a siloed approach to water security
is climate change.
“It’s time decision-makers realise that
reducing emissions and undertaking
adaptation projects is water management.
Likewise, fixing leaky pipes, restoring
mangroves and expanding access to sanitation
and other water services is building climate
resilience. These two agendas need to come
together to create a water- and climateresilient future,” says Iceland.
Fargher sees parallels in arguments over
water security and the climate debate. The cost
of reform can seem high, political will is found
wanting and strategy rarely translates into
action, he says.
Inaction on water security could represent
regional GDP losses of as much as 6 per
cent by 2050, according to the World Bank.
However, Fargher says cost is often seen
as coming further down the track and not
requiring an immediate response.
“We continue to focus on the cost of action,
when the cost of inaction is far greater. We
have to overcome this bias, because as we
continue to experience the effects of climate
change and water insecurity, ‘down the track’
seems increasingly close.”
