Devastating droughts in California, Brazil, South Africa and elsewhere, coupled with global trends of groundwater depletion and water quality degradation, are motivating investors to become more water aware. Water, in fact, is the new carbon for many Ceres Investor Network members.
In less than two years, our Investor Water Hub, a working group within the Ceres Investor Network on Climate Risk and Sustainability, has grown tremendously, from a network of 10 institutional investors managing $1 trillion in assets, to more than 80 investors with some $19 trillion in assets under management. The working group offers peer-to-peer sharing and a forum for collective action and research on the best practices for integrating water risk into investment decision-making.
The Ceres Investor Water Hub sets out to do just that. Its research helps investors identify where water impacts are most material in their portfolios so that they can proactively manage those risks. Already, investors are moving beyond a basic understanding of risks associated with company water usage and wastewater management, to scenario analysis and sector-specific risk assessments. Investors are also exploring ideas that help drive investing in solutions that support sustainable water resources for generations to come.
Ceres further advanced investing in sustainable water solutions in 2016 through our collaborative effort to develop a standard for certifying green bonds for water. The new standard for water bonds, that are also climate resilient, provides investors with verifiable science-based criteria for evaluating bonds earmarked for water projects.
The standard ensures that these types of water projects are credibly ‘green,’ which is essential to promoting the growth of this market. In addition to helping investors deploy capital more rapidly towards water infrastructure, it also raises awareness with issuers, whether corporations or municipalities, that this type of financing is available.
San Francisco’s Public Utilities Commission was the first to use the standard in 2016 when it adopted a certified green bond for water infrastructure. Proceeds from its $240 million Wastewater Revenue Bond will fund eligible projects in sustainable stormwater management and wastewater projects.