ArticlePDF Available

Water sustainability of investors: Development and application of an assessment framework


Abstract and Figures

Although corporate social responsibility in general and corporate water stewardship specifically are of increasing concern to businesses, investors are lagging behind in fostering water sustainable investment practices – despite the large impact their investment decisions have on the state and shape of tomorrow's water resources. This paper is the first-ever study to assess whether and how investors include water sustainability criteria in their investment decisions, by scrutinizing their publicly released policies on the topic. We hereto (1) developed an assessment framework using the water footprint concept, (2) applied it to twenty large investors in a case study for the Netherlands, and (3) ranked them accordingly. We found that, by and large, water sustainability is a blind spot to investors, resulting in disclosed policies being neither well-demarcated nor clearly formulated, especially regarding the supply chain of the activities invested in. There is a long way to go before investors can ensure efficient, sustainable and fair water use in their investment policy, but our framework helps investors direct their urgently needed improvement process, to transition toward water sustainable production systems in a circular economy.
Content may be subject to copyright.
Water sustainability of investors: Development and application of an
assessment framework
Rick J. Hogeboom
, Ilja Kamphuis
, Arjen Y. Hoekstra
Twente Water Centre, University of Twente, Drienerlolaan 5, 7522NB, The Netherlands
Institute of Water Policy, Lee Kuan Yew School of Public Policy, National University Singapore, 259770, Singapore
article info
Article history:
Received 9 April 2018
Received in revised form
14 August 2018
Accepted 16 August 2018
Available online 17 August 2018
Water sustainability
Sustainable investing
Water footprint
Water disclosure
Corporate water stewardship
Corporate social responsibility
Although corporate social responsibility in general and corporate water stewardship specically are of
increasing concern to businesses, investors are lagging behind in fostering water sustainable investment
practices edespite the large impact their investment decisions have on the state and shape of tomor-
row's water resources. This paper is the rst-ever study to assess whether and how investors include
water sustainability criteria in their investment decisions, by scrutinizing their publicly released policies
on the topic. We hereto (1) developed an assessment framework using the water footprint concept, (2)
applied it to twenty large investors in a case study for the Netherlands, and (3) ranked them accordingly.
We found that, by and large, water sustainability is a blind spot to investors, resulting in disclosed
policies being neither well-demarcated nor clearly formulated, especially regarding the supply chain of
the activities invested in. There is a long way to go before investors can ensure efcient, sustainable and
fair water use in their investment policy, but our framework helps investors direct their urgently needed
improvement process, to transition toward water sustainable production systems in a circular economy.
©2018 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license
1. Introduction
Sustainable use of the Earth's nite freshwater resources is
imperative for future economic development (WWAP, 2017).
Without adequate water supply, factories come to a halt, food
production hampers, and eventually entire economies falter.
However, managing this precious resource wisely is not a
commonplace, as is illustrated by the World Economic Forum
(WEF) consistently ranking water crises in the top-three of sys-
temic risks posed to the global economy in terms of impact (WEF,
2017). Saliently, before 2010 water did not make it even to their
top-twenty. Reaching Sustainable Development Goal (SDG) 6 e
ensuring availability and sustainable management of water and
sanitation for all erequires a nancial injection of at least US$ 2.6
trillion until 2050, part of which inevitably will have to come from
private investors (Kolker et al., 2016). Not acting on water sus-
tainability could diminish national growth rates by as much as 6
percent of GDP by 2050 (World Bank, 2016). On the positive side,
there are substantial opportunities for companies and investors
alike to start and fund (water) sustainable business models
(Damania et al., 2017), which can realise large sustainability gains
(Sumaila et al., 2017) at even no cost to risk and return (Utz et al.,
Recently, the corporate world started waking to the realisation
that improved water management is fundamental for future pros-
perity and human wellbeing (Roca and Searcy, 2012). Responses
and action initiatives include disclosure of water use and pollution
(CDP, 2015), identifying water risks (Larson et al., 2012), and
striving toward good water stewardship (Kelly, 2014) through
corporate certication schemes (AWS, 2017), developing business
platforms to share best and emerging practices (CEO Water
Mandate, 2017) and suggesting context-based water targets for
companies (Pacic Institute, 2017).
Regarding disclosure, CDP releases reports for investors seeking
assurance that their investments are well placed to generate
favourable returns and avoid value destruction because of negative
impacts on water systems (CDP, 2015). In their survey of over 1000
publicly listed companies, managing US$ 63 trillion in assets,
almost two-thirds of respondents reported exposure to substantive
water risk, both in their operations (2400 risks identied) and
supply chain (800 risks identied). However, the same survey
showed that only 11% of companies publish a company-wide water
*Corresponding author.
E-mail addresses: (R.J. Hogeboom), i.kamphuis@ (I. Kamphuis), (A.Y. Hoekstra).
Contents lists available at ScienceDirect
Journal of Cleaner Production
journal homepage:
0959-6526/©2018 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license (
Journal of Cleaner Production 202 (2018) 642e648
policy that includes, among others, the setting of performance
standards for both direct operations and suppliers. Beyond disclo-
sure, water scarcity and pollution may pose physical, regulatory
and reputational risks (Morrison et al., 2010). Companies are
setting up ways of dealing with such risks (Larson et al., 2012),
partly because of an intrinsic believe that action is needed, but also
eperhaps more cynically viewed ein an attempt to extend their
businesscontrol over water resources or to protect their brand
name (Hepworth, 2012). Water stewardship, then, goes a step
further, by evaluating water use sustainability across the entire
value chain, the formulation of water consumption and pollution
reduction targets, an adequate implementation plan, and proper
reporting on all of the above (Hoekstra, 2014a).
While companies are thus trying to make current business
models more water sustainable or water-proof for the future, to
date, the role of investors is underexposed (V
osmarty et al., 2018).
Moreover, there are signs that the role of investors is modest at
best, as they are lagging behind in fostering and facilitating more
(water) sustainable business practices (Busch et al., 2016).
Despite these observations, a host of initiatives to help and
guide investors to become more sustainable emerged over the past
decade, each with its own approach, method and denitions. For
example, Responsible Investment (RI) eor Sustainable Responsible
Investment (SRI) eaims to integrate environmental, social and
governance (ESG) factors into investment decisions (Eurosif, 2016).
Such factors are often incorporated to a limited extent, due to lack
of trustworthy ESG indicators and data (Busch et al., 2016), and
varying collective beliefs on what RI ought to entail (Louche and
Dumas, 2016). Investors may also incorporate ESG or similar
criteria through Corporate Social Responsibility (CSR) programmes
(see Carroll and Shabana (2010) for a review and Oh et al. (2013) for
two case studies); by carrying out triple bottom line assessments
(Norman and MacDonald, 2004); by adhering to the United Nations
initiated Principles of Responsible Investment (UN PRI, 2017); or by
becoming certied by the Alliance for Water Stewardship (AWS,
2017). Topics encompass various sustainability domains, ranging
from child labour to carbon emissions, and from deforestation to
human rights. Although the long lists of both initiatives and topics
suggests that sustainability is high on investorsagendas, the gist of
recent literature reveals investor progress on water sustainability is
skin deep at best, hindered primarily by a lack of perceived urgency
about, a shared taxonomy on and meaningful indicators regarding
water sustainability of their investments.
The ill-addressing of water sustainability by investors is
particularly alarming in regard to future water issues, since the
economy of tomorrow is shaped to a large extent by choices made
by investors today. After all, investments today in new or updated
farms, rms and factories will have ramications for future water
resource use and pollution. Failure by investors to transition from
business-as-usual to more sustainable water practices implies
water resources will continue to be further depleted, polluted and
needlessly wasted, while prolonged inconsideration of sharing
water resources fairly among users increases the likelihood of
conicts. Current investment practices thus sustain unsustainable
water management (Lambooy, 2011), while rendering sustainable
production systems in a circular economy a utopian vista.
This paper aims to contribute to the slim body of knowledge on
how investors relate to water concerns, by investigating whether
and how investors currently include water sustainability criteria in
their investment decisions. Ideally, the facts on the ground are
assessed, namely the water sustainability of actually invested-in
projects or portfolios. Since such ground-truthing is an unreach-
able goal because of the inaccessibility of relevant data, we resorted
to drawing on policy documents released to the public to make the
assessment instead.
We developed and applied a framework to assess these policies
of investors regarding their incorporation of water sustainability
criteria. The application is done for a case study including twenty
large investors - banks, pension funds and insurers ein the
Netherlands. The assessment of investorspolicies is concluded
with a ranking of the investigated investors, to distinguish leaders
and frontrunners from followers and stragglers, and to incentivise
investors to improve their business practice with regards to water
Although the focus is on Dutch (institutional) investors, the
scientic soundness and comprehensiveness of the proposed
framework render it suitable for wider application. Investors form a
major actor group that is being overlooked in contemporary water
management discourse. This paper provides a rst and timely
attempt to systematically address the role investors play in
contributing to sustainable water use. By bridging the worlds of
investors and water managers, this study combines perspectives for
mutual learning.
2. Method and data
The method consists of three main parts: (1) the denition of
water sustainability in this study, (2) the development of a frame-
work to assess investorsinvestment policies on inclusion of water
sustainability criteria, and (3) the procedure of applying this
framework to twenty Dutch investors.
2.1. Water sustainability dened
In this study, water sustainability is dened along three di-
mensions of sustainability eefcient allocation, sustainable scale
and equitable distribution eas rst proposed by Daly (1992), and
rened and tailored to water by Hoekstra (2014b). These three di-
mensions, encompassing economic, environmental and social
concerns, can be operationalized using the water footprint (WF), a
temporally and spatially explicit indicator of water consumption
and pollution (Hoekstra et al., 2011). The green WF represents
rainwater consumption of a human activity, the blue WF refers to
surface water and groundwater consumption, and the grey WF
provides a measure of water pollution. Using WF tools and these
three dimensions, connections between water use, economic
development, business practice, and social and environmental risks
can be better understood (Herva et al., 2011). The dimension of
efcient allocation of water can be operationalized by formulating
water footprint benchmarks per product or process; sustainable
scale by dening a water footprint cap per river basin; and equi-
table distribution by dening fair water footprint shares per com-
munity (Hoekstra, 2013). These dimensions have to be assessed in
both the direct operations of any prospective investment and its
supply chain, since in many cases direct water use comprises only a
fraction of supply chain water consumption (Linneman et al., 2015).
2.2. Framework development
A framework was developed to assess how investorsinvest-
ment policies incorporate aspects relevant to sustainable use of
water. The framework is inspired by that of Linneman et al. (2015),
who developed a framework to assess water transparency of stock-
listed companies (rather than water sustainability of institutional
investors). The framework consists of nine categories elabelled A
to I and shown in Fig. 1 ewhich collectively cover criteria relevant
to water use and pollution associated with prospective in-
vestments. Each category contains three to seven equally weighted
assessment criteria, which are formulated as closed questions.
Answers to the questions result in a score of zero to two or three
R.J. Hogeboom et al. / Journal of Cleaner Production 202 (2018) 642e648 643
points per question, where a zero-point score indicates the investor
does not consider the criterion at all, and the maximum score etwo
or three points, depending on the question eimplies the investor
considers the criterion to its best capacity. We roughly followed a
progressive scoring approach, meaning that points can be scored
fairly easily on the rst question within a category (e.g. testing if the
investor is aware of the particular criterion at all, without further
qualications), but that scoring on subsequent questions becomes
increasingly difcult (e.g. questioning that goes beyond mere
awareness, testing if specic metrics are employed and/or evalu-
ated against set targets).
In order to aggregate criterion scores to the category level, the
sum of the points scored on each question within the category is
taken. The resulting total category score in points is subsequently
expressed as a percentage: a total of 0 points corresponds to a 0%
category score, while all points scored on the category questions
translates to a 100% score. This is done to avoid that categories with
more questions attain a higher weight. Thus, the nal investor score
on water sustainability is calculated as the average percentage
score over all nine categories, where each category contributes an
equal weight of 11.1%.
Category A on Policy Disclosureassesses the transparency of
an investor regarding sustainability issues in its investment policy
in general and water sustainability specically. Although reporting
is not the same as actually acting in a sustainable manner, disclo-
sure facilitates the enfolding of a debate on water, and allows the
general public to hold the investor accountable. This category is
prerequisite, since without disclosure scores cannot be assigned to
remaining categories. Questions range from whether the investor
discloses information on sustainability in general at all, to whether
the investor reports on following certain sustainability guidelines,
or frameworks or directives regarding water sustainability.
Categories B and C on Water Accountingcover the quanti-
cation (measuring and monitoring) of water consumption and
pollution, both in direct operations and in the supply chain of the
activity created by the proposed investment. Accounting water use
and pollution is imperative in any complete assessment of water
resources, because water use or pollution reduction targets can
only be formulated once direct and indirect claims to freshwater
are known; you cannot manage what you do not measure. Water
accounts in and by themselves do not provide a comprehensive
indication of sustainable water practice; rather, such accounts serve
as a basis for the remaining categories, which relate to three di-
mensions of wise water use (Hoekstra and Wiedmann, 2014).
Categories D and E on Efcient Water Useconcern the efcient
use of water resources by the activity emerging from the pro-
spective investment. Criteria range from simply showing awareness
of the notion of water efciency in direct operations of an invest-
ment, to adopting benchmarking procedures in the supply chain
and setting reasonable water use and pollution targets against
which to compare water use and pollution caused by prospective
investment activities.
Categories F and G on Environmental Sustainabilityput the
water use and pollution resulting from an investment (as quantied
in categories B and C) in the context of locally available water re-
sources eboth at the location(s) of the direct operations and at the
locations where supply chain activities will take place. Questions
probe whether the investor considers potential water scarcity is-
sues, such as violation of environmental ow requirement in the
basin(s) where the activities are planned, and how it anticipates on
resolving these issues through response strategies.
The last categories H and I on Social Equitycover an investor's
awareness of and response to social equity concerns that may result
from the water use and pollution that will come along with the
activity targeted by the investment. Of interest are both community
concerns in the place(s) of the activity itself and community con-
cerns in the locations of the supply chain of the activity.
The questions in each category and a format for how points are
assigned to each question are enclosed in the Supplementary
Materials 1.
2.3. Framework application and ranking
The assessment framework is applied to the eighteen largest
investors in the Netherlands based on their asset value in 2016.
Asset values, viz. the worth of the investor, serve as a proxy for
assets under management of the investor (i.e. the total market
value of assets an investment company manages on behalf of its
clients). Although the latter is the preferred indicator of an in-
vestor's size, no unambiguous data could be retrieved for this
parameter. Asset values for 2016 are taken from the Dutch National
Bank (DNB, 2016). Since hardly any published policy briefs by pri-
vate investors are available to the public, selection eligibility was
limited to banks, insurance companies and pension funds.
Triodos Bank and ASN Bank were added to the subset of the
eighteen largest investors, on the basis of their perceived leading
role in sustainable investing and the accompanying expectation
that we might uncover examples of best practices by including
them. Although ASN Bank is a brand in the SNS Bank holding, it has
its own policies and operates independently. The resulting selec-
tion of twenty investors includes nine banks, ve insurance com-
panies, and six pension funds, as listed in Table 1.
To assign scores to the criteria of the framework, we solely relied
on publicly disclosed information on an investor's investment
policy. We analysed information published or referred to by the
investor itself on its ofcial websites, in both English and Dutch
languages, and on multiple webpage domains if applicable. All
webpages and (policy) documents were used which contained or
pointed to information regarding investment policy, water, sus-
tainability, and other relevant search terms such as Corporate Social
Responsibility, Environment Social and Governance factors,
Fig. 1. Assessment framework with nine categories.
R.J. Hogeboom et al. / Journal of Cleaner Production 202 (2018) 642e648644
Responsible Investing, Triple Bottom Line, and People Planet Prot.
For the selected twenty investors, we scrutinized 44 unique web-
sites and 226 relevant documents published on or linked to by
these websites. Webpages and documents thus found and analysed
are listed in Supplementary Materials 2.
The nal investor score on water sustainability directly de-
termines the ranking of the selected investors.
3. Results
The ranking of the twenty selected Dutch investors on how well
they incorporate water sustainability criteria in their investment
policy is shown in Fig. 2. The colours represent the various cate-
gories of the assessment framework. Table 2 provides a more
detailed scoring overview, containing percentage scores per
investor per category.
The top-three highest ranked investors comprises NIBC Direct
(46%), Nationale-Nederlanden (39%) and ASN Bank (38%). The
following excerpt from NIBC Direct's policy illustrates its awareness
of the various dimensions related to water sustainability:
At NIBC, we recognize that we operate in a complex world,
where climate change, water scarcity, biodiversity loss and popu-
lation growth create signicant sustainability challenges and un-
precedented pressures on natural and human systems. The
increasing demand for - and scarcity of - resources may lead and
has led to conicts, political and economic instability. We are
committed to take environmental criteria into consideration in our
business activities, including protection and conservation of
biodiversity and maintaining the benets of ecosystem services.
() In addition to the risks and standards mentioned in our Sus-
tainability Policy and sector specic policies, NIBC considers the
- Impacts on natural resources and ecosystem services;
- Pollution to air, water, and land resulting from the client's op-
erations (land or ground water); ( )
- Environmental impact assessments and taking appropriate
measures to manage environmental impacts, including policies,
management systems, or supply chain criteria.NIBC Direct
The scores show that typically investors score highest in cate-
gory A Policy Disclosure, with an average score acrossinvestors of
72%. Of the remaining categories, those concerning direct opera-
tions yield substantially higher scores (average scores category B:
36%; D: 33%, F: 38%; H: 30%) than the categories assessing supply
chains (average scores category C: 3%; E: 8%, G: 8%; I: 3%). All in-
dividual investors score higher in operations than supply chain
categories as well. While thirteen out of twenty investors score
points in all four operations categories, only one (i.e. NIBC Direct)
scores points in all four supply chain categories. Moreover, eleven
out of twenty investors do not score any points in the supply chain
categories at all. The scores indicate that generally, the role of the
supply chain in water sustainability receives little to no attention in
investment policy.
Table 1
The twenty selected Dutch investors and their asset values in 2016 as taken from
DNB (2016).
Investor Name Investor Type Assets (EUR billion)
ING Bank bank 886
Rabobank bank 687
ABN AMRO Bank bank 416
ABP pension fund 384
PFZW pension fund 186
BNG Bank bank 163
NWB Bank bank 104
Nationale-Nederlanden insurance company 94
Aegon Levensverzekering insurance company 75
Shell Pensioenfonds pension fund 68
PMT pension fund 66
SNS Bank bank 64
bpfBOUW pension fund 57
REAAL insurance company 56
Achmea Verzekeringen insurance company 52
PME pension fund 43
ASR Levensverzekering insurance company 42
NIBC Direct bank 24
ASN Bank bank 11
Triodos Bank bank 9
Including ASN Bank assets.
Assets under management in 2016 (ASN Bank, 2016).
Fig. 2. Ranking of selected large Dutch investors on incorporation of water sustainability criteria in their investment policy.
R.J. Hogeboom et al. / Journal of Cleaner Production 202 (2018) 642e648 645
Regarding the type of investor, the pension funds score lower
than banks and insurance companies. Five out of six pension funds
are ranked in the bottom-six of twenty investors investigated.
There appears to be no noteworthy difference between the scores
of banks and insurance companies. Regarding the asset size of in-
vestors, no pattern emerges for the results either. Both smaller and
larger investors are ranked in the top-ve, as well as in the bottom-
4. Discussion
All assessed investors in some form express a willingness to
contribute to a more sustainable world by adopting or supporting
sustainability guidelines, frameworks or principles. All twenty in-
vestors, for example, are signatories of the United Nations' Princi-
ples for Responsible Investment (UN PRI, 2017). However, in
analysing policy documents to assign scores to water sustainability
criteria, it was found that their good intentions didnot trickle down
to effectuate clear water policy. In many cases, policy is formulated
in general, ambiguous, supercial or even meaningless terms (cf
Scholtens (2014)). For example, eleven out of twenty investors state
water considerations ein its widest sense einuence their in-
vestment decisions, but without bothering to give any further
explanation. Alternatively, some (mainly low scoring) investors
publish several policy documents amply stressing the importance
of sustainability, but do not specify the role of water. Shell Pen-
sioenfonds, for example, only mentions the word watertwice in all
sustainability documents investigated, and PME thrice. Apparently,
water does not have a place in their perspective on sustainability.
Another example is from SNS Bank's holding company De Volks-
bank, which mentions the word water32 times in its Carbon
Prot and Loss Methodologyemore than in all of their other
documents combined ebut only in the context of translating water
consumption to CO
-equivalents (De Volksbank, 2016). Such
attention for detail regarding CO
is absent in their water policies,
and so is a denition or explanation of how exactly they account for
water use. In addition, many investors mention examples of a
reduction in water consumption of their investments in absolute
terms, conveying the impression of sustainable business practice.
However, without any further explanation or comparison, such
statements are meaningless. Only once consumption is considered
per unit of output and compared to benchmark values, meaningful
sustainable water practice can be claimed. ASR Levensverzekering's
real estate branch ASR Vastgoed provides an example of good
practice in this regard. In assessing a prospective investment,
ASR Vastgoed performs a BREEAM assessment, which uses
recognized measures of performance set against established
benchmarks, to evaluate () a broad range of categories and
criteria. They include aspects related to () water use, ( ), and
pollution.(UN PRI, 2015).
The less exemplary ndings, however, conrm a study by Daub
(2007) of a decade ago, stating that disclosed documents may
provide only supercial information, using interchangeable ter-
minology and even leading to a value of the disclosed information
that tends to hover around zero.
Another nding that emerged from the assessment is that water
policy is often fragmented and lacking coherence. For all investors
with an above-average ranking, the scores are based on at least
three and up to ten different documents or webpages. No investor
received its total score solely based on a single document. Even if
dedicated water chapters were available, additional points could
still be assigned based on other documents. Because of the frag-
mentation of relevant information on water sustainability, it proved
cumbersome to isolate or dene a coherent water policy for most
Related to the fragmentation is the ambiguity surrounding who
is responsible when an investor outsources the management of its
assets, especially if both asset manager and investor have their own,
potentially conicting policies about dealing with water sustain-
ability. A similar confusion arises when an investor is a subsidiary of
Table 2
Overview of scores per assessment category.
Investor Name Type
A (%)
Water Accounting Efcient Water Use Environmental Sustainability Social Equity Total (%)
B (%)
Chain C (%)
D (%)
Chain E (%)
F (%)
Chain G (%)
H (%)
Chain I (%)
ABN AMRO Bank b 83.3 47.6 0.0 44.4 16.7 66.7 0.0 20.0 0.0 31.0
ABP p 83.3 14.3 0.0 8.3 0.0 20.0 0.0 0.0 0.0 14.0
Achmea Verzekeringen i 66.7 0.0 0.0 0.0 0.0 30.0 0.0 50.0 0.0 16.3
Aegon Levensverzekering i 100.0 21.4 0.0 33.3 8.3 40.0 0.0 20.0 0.0 24.8
ASN Bank b 66.7 57.1 0.0 61.1 0.0 60.0 20.0 60.0 20.0 38.3
ASR Levensverzekering i 66.7 52.4 0.0 77.8 0.0 20.0 0.0 20.0 0.0 26.3
BNG Bank b 50.0 42.9 0.0 0.0 0.0 10.0 0.0 0.0 0.0 11.4
bpfBOUW p 83.3 7.1 0.0 16.7 16.7 0.0 0.0 0.0 0.0 13.8
ING Bank b 66.7 52.4 0.0 88.9 0.0 40.0 0,.0 53.3 0.0 33.5
Nationale-Nederlanden i 66.7 47.6 0.0 44.4 16.7 73.3 40.0 60,0 0.0 38.7
NIBC Direct b 66.7 52.4 38.1 44.4 27.8 60.0 40.0 40,0 40.0 45.5
NWB Bank b 83.3 76.2 0.0 8.3 8.3 20.0 0.0 40,0 0.0 26.2
PFZW p 66.7 42.9 14.3 55.6 33.3 53.3 20.0 53.3 0.0 37.7
PME p 83.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9.3
PMT p 83.3 0.0 0.0 0.0 0.0 10.0 0.0 0.0 0.0 10.4
Rabobank b 66.7 38.1 0.0 61.1 0.0 66.7 0.0 40.0 0.0 30.3
REAAL i 66.7 66.7 0.0 44.4 0.0 66.7 0.0 40.0 0.0 31.6
Shell Pensioenfonds p 50.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.6
SNS Bank b 66.7 38.1 0.0 33.3 0.0 53.3 0.0 26.7 0.0 24.2
Triodos Bank b 66.7 52.4 0.0 27.8 27.8 66.7 33.3 66.7 0.0 37.9
Maximum Possible Score 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Lowest Score 50.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.6
Highest Score 100.0 76.2 38.1 88.9 33.3 73.3 40.0 66.7 40.0 45.5
Average Score 71.7 35.5 2.6 32.5 7.8 37.8 7.7 29.5 3.0 25.3
b¼bank, i ¼insurance company, p¼pension fund.
R.J. Hogeboom et al. / Journal of Cleaner Production 202 (2018) 642e648646
a larger holding company, with similarly potential discrepancies in
individual policies. Even in absence of such institutional difculties,
is was often unclear which documents should be leading, if frag-
mented documents contradicted each other. As a rule, scores were
assigned based on the most favourable documents. That being said,
some investors have dedicated greenor special focus funds with
stricter policies than the parent company or other funds held by the
investor. In such cases, we let the policy representative of the
majority of the investors' activities be guiding in assigning scores.
In any case, the complexity of the investors' organizational set-up
should not inhibit sustainable water practice (Lagoarde-Segot and
Paranque, 2018).
Some investors include water aspects in their policy not
assessed by our framework, such as ooding, sea level rise, biodi-
versity and hydroelectricity. These were not the focus of our
resources-based assessment, but relevant nonetheless to different
sustainability contexts.
While the focus of this study is the investor's consideration of
water sustainability criteria in prospective investments, some in-
vestors report on water use of their own in-house operations.
Rabobank (2015) and Aegon (Aegon Asset Management, 2016), for
example, both explicitly account for water use in their ofces.
Although a praiseworthy exercise, the arguably much larger water
use by their investments is largely left unnoticed.
The scoring of investors is based disclosed policies rather than
on actual ground-truthed performance, which limits the interpre-
tation of our resulting water sustainability assessment. Moreover,
in addition to disclosed policies investors may comply with inter-
nal, possibly condential procedures. Aegon, for example, hints to
the existence of internal procedures in an informal Q&A interview
format presented in its Responsible Investment Report 2016 (Aegon
Asset Management, 2016). If included in our assessment, these
internal documents, might have given rise to higher scores than
assigned in this study. On the other hand, publicly available docu-
ments might keep up appearances of actual investment practice,
indicating too high scores might have been assigned.
The ranking of investors based on the assessment framework is
subjective to some degree. Firstly in the composition of the
framework itself, but also in the weighting of categories and the
scoring within each category. While the former is an inherent
design consequence, for the latter two, a closer look at the distri-
bution of points scored over the nine categories shows that in-
vestors with a high total score received this score based on points
assigned in multiple categories. No investor that scores high points
in operations categories outranks investors with fewer points
spread over both operations and supply chain categories. We would
not expect differently, since typically investors start considering
supply chains only after covering water criteria in direct operations.
A change in weighting may therefore alter the absolute scores, but
will affect the ranking only to a limited extent.
Future research may rene, test and build upon our framework
and ndings, especially in capturing and describing intricacies
related to which policies are guiding in practice, how these policies
are applied, and the actual ground-truthing of water sustainability
of activities invested in. This may for instance be done in a case
study setting, where collaboration is sought with selected investors
and their local investees.
Few rankings of Dutch investors are available for comparison. In
the Fair Finance Guide (FFG) ranking of general sustainability of
Dutch nancial institutions, ASN Bank, SNS Bank and Triodos Bank
score high points, followed at a distance by NIBC Direct, in the
category Climate Change(Brink et al., 2016a). In FFG's insurers
subsection, Nationale-Nederlanden is in the bottom of the list
(Brink et al., 2016b), while they lead the water sustainability
ranking in our study. The main reason for the difference in rankings
appears to be the main focus of FFG on CO
reduction measures,
while we conned ourselves to water criteria.
Although the framework is applied to Dutch banks, pension
funds and insurance companies, it can readily be used for other
countries and types of investors as well. The framework provides a
reference for the inception of new investment policy on incorpo-
rating water sustainability criteria, or for uptake in Corporate Social
Responsibility practice or ESG frameworks (Peir
o-Signes et al.,
2013). Given the plethora of sustainability frameworks, principles
and standards available, and the resulting dilution of focus (Krajnc
and Glavi
c, 2005), the water sustainability criteria of our frame-
work are preferably integrated with existing efforts on developing
common taxonomies, such as e.g. those by the Pacic Institute
Since certain sectors, such as the Food and Beverage industry
and Mining, are more water-intensive or susceptible to water risks
ein either their operations or supply chain ewe recommend in-
vestors to start implementing water sustainability criteria specif-
ically in these sectors (Rueda et al., 2017). Some investors, such as
ABN AMRO (ABN AMRO, 2017) and Aegon Levensverzekering
(Aegon Asset Management, 2016), already formulate their
Responsible Investment policy- including water aspects - sector-
5. Conclusion
The state of water resources in the future greatly depends on the
extent to which investors today include water criteria in their in-
vestment decisions. This study set out to nd out how investors
include water sustainability criteria in their investment decisions,
thereby contributing to the body of knowledge on how the
currently overlooked and under-addressed actor group of investors
relate to water concerns.
The main conclusion is that despite their expressed good in-
tentions, the low total score of even the highest scoring investors in
the Netherlands (<46%) indicates that their ambitions have not
trickled down (yet) to effectuate clear water policy. Investors score
points on disclosure and reporting -the rst, readily doable step -
but that in itself does not guarantee actual water sustainable in-
vestment practice. Assessing numerous policy documents revealed
that, by and large, disclosed policy on water sustainability is neither
well-demarcated nor clearly formulated. This conrms earlier ob-
servations by Scholtens (2014),Lambooy (2011) and Daub (2007),
and bolster scepticism about an imminent and prompt transition to
water sustainable production systems in a circular economy. That
being said, preliminary but promising water policies, such as that of
frontrunner NIBC Direct, or a sector-specic approach as pursued
by ABN AMRO and Aegon Levensverzekering, lead the path in the
right direction and deserve recognition.
The practice of accounting for water use and pollution in both
operations and supply chains of the activities emerging from pro-
spective investments is imperative, but we found that especially
the supply chain part of the value chain is being overlooked by most
investors. In addition, low scores in Categories D eI(Table 2) show
that investors are still a long way from guaranteeing that their
prospective investments safeguard efcient water use, t a sus-
tainable scale, and ensure a fair sharing of limited water supplies.
Moreover, we discovered how a lack of mutual understanding
and exchange between the investor community and the water
management community inhibits the development of sound,
practical and science-based water investment policy. Concurrently,
increased collaboration may hold the linchpin for developing water
sustainable investment practices. The assessment framework
developed and applied in this study is a rst attempt to straddle the
gap by providing investors with systematic handles to give
R.J. Hogeboom et al. / Journal of Cleaner Production 202 (2018) 642e648 647
substance to their own improvement process to incorporate water
criteria into investment decisions. In the end, the purpose of
assessing and ranking investors is to incentivise them to improve.
In light of the severity of water issues faced today, we stress the
urgency to take action, both specically toward incorporating wa-
ter criteria into investment decisions and generally toward more
water sustainable economies.
This work was partially supported by NWO Earth and Life Sci-
ences (ALW), project 869.15.007. The work was partially developed
within the framework of the Panta Rhei Research Initiative of the
International Association of Hydrological Sciences (IAHS).
Appendix A. Supplementary data
Supplementary data related to this article can be found at
ABN AMRO, 2017. Summary, Agri-commodities Policy. ABN AMRO. https://www.
(Accessed 5 January 2017).
Aegon Asset Management, 2016. Responsible Investment Report 2015. Aegon Asset
df937b70/responsible-investment-2015.pdf. (Accessed 12 May 2016).
ASN Bank, 2016. ASN Bank Verslag 2016. Den Haag: ASN Bank. https://verslag.
2016.pdf. (Accessed 14 November 2017).
AWS, 2017. Alliance for Water Stewardship Certication.
(Accessed 25 October 2017).
Brink, H., Riemersma, M., Simons, M., de Wilde, J., 2016a. Eerlijke Bankwijzer:
Beoordeling Van Het Duurzaamheidsbeleid Van Tien Bankgroepen [Fair Finance
Guide: Assessment of the Sustainability Policy of Ten Banking Groups. Pro-
fundo, Amsterdam. (Accessed 10
January 2017).
Brink, H., Riemersma, M., Simons, M., de Wilde, J., 2016b. Eerlijke Verzeker-
ingswijzer: Beoordeling Van Het Duurzaamheidsbeleid Van Tien Verzeker-
ingsgroepen [Fair Finance Guide: Assessment of the Sustainability Policy of Ten
Insurance Companies]. Profundo, Amsterdam.
beleid-verzekeraars-17-11-16.pdf. (Accessed 10 January 2017).
Busch, T., Bauer, R., Orlitzky, M., 2016. Sustainable development and nancial
markets:old paths and new avenues. Bus. Soc. 55 (3), 303e329.
Carroll, A.B., Shabana, K.M., 2010. The business case for corporate social re-
sponsibility: a review of concepts, research and practice. Int. J. Manag. Rev. 12
(1), 85e105.
CDP, 2015. CDP Global Water Report 2015. CDP, London.
research/global-reports/global-water-report-2015. (Accessed 26 October 2017).
CEO Water Mandate, 2017. UN Global Comparct's CEO Water Mandate. https:// (Accessed 11 February 2017).
Daly, H.E., 1992. Allocation, distribution, and scale: towards an economics that is
efcient, just, and sustainable. Ecol. Econ. 6 (3), 185e193.
Damania, R., Desbureaux, S., Hyland, M., Islam, A., Moore, S., Rodella, A.S., Russ, J.,
Zaveri, E., 2017. Uncharted Waters : the New Economics of Water Scarcity and
Variability. World Bank, Washington D.C.. https://openknowledge.worldbank.
sequence¼2&isAllowed¼y. (Accessed 26 October 2017)
Daub, C.H., 2007. Assessing the quality of sustainability reporting: an alternative
methodological approach. J. Clean. Prod. 15 (1), 75e85.
De Volksbank, 2016. De Volksbank Carbon Prot and Loss Methodology. https://
d90bf7773dc882856562af1c16c9cca4e6ed1793.pdf. (Accessed 12 May 2016).
DNB, 2016. Data on Financial Institutions.
statistics-dnb/nancial-institutions/index.jsp. (Accessed 12 May 2016).
Eurosif, 2016. European SRI Study 2016. Brussels: European Sustainable Investment
Forum (EUROSIF).
study-2016-LR-.pdf. (Accessed 25 October 2017).
Hepworth, N., 2012. Open for business or opening Pandora's box? A constructive
critique of corporate engagement in water policy: an introduction. Water Al-
ternatives 5 (3), 543e562.
Herva, M., Franco, A., Carrasco, E.F., Roca, E., 2011. Review of corporate
environmental indicators. J. Clean. Prod. 19 (15), 1687e1699.
Hoekstra, A.Y., 2013. The Water Footprint of Modern Consumer Society. Routledge,
Hoekstra, A.Y., 2014a. Water scarcity challenges to business. Nat. Clim. Change 4 (5),
Hoekstra, A.Y., 2014b. Sustainable, efcient and equitable water use: the three
pillars under wise freshwater allocation. WIREs Water 1 (1), 31e40.
Hoekstra, A.Y., Chapagain, A.K., Aldaya, M.M., Mekonnen, M.M., 2011. The Water
Footprint Assessment Manual: Setting the Global Standard. Earthscan, London.
Hoekstra, A.Y., Wiedmann, T.O., 2014. Humanity's unsustainable environmental
footprint. Science 344 (6188), 1114e1117.
Kelly, P., 2014. What to do when we run out of water. Nat. Clim. Change 4 (5),
Kolker, J., Kingdom, W., Tr
emolet, S., Winpenny, J., Cardone, R., 2016. Financing
Options for the 2030 Water Agenda. World Bank, Washington, DC. https://
20Options.pdf. (Accessed 10 October 2017).
Krajnc, D., Glavi
c, P., 2005. How to compare companies on relevant dimensions of
sustainability. Ecol. Econ. 55 (4), 551e563.
Lagoarde-Segot, T., Paranque, B., 2018. Finance and sustainability: from ideology to
utopia. Int. Rev. Financ. Anal. 55, 80e92.
Lambooy, T., 2011. Corporate social responsibility: sustainable water use. J. Clean.
Prod. 19 (8), 852e866.
Larson, W.M., Freedman, P.L., Passinsky, V., Grubb, E., Adriaens, P., 2012. Mitigating
corporate water risk: nancial market tools and supply management strategies.
Water Alternatives 5 (3), 582e602.
Linneman, M., Hoekstra, A., Berkhout, W., 2015. Ranking water transparency of
Dutch stock-listed companies. Sustainability 7 (4), 4341e4359.
Louche, C., Dumas, C., 2016. Collective beliefs on responsible investment. Bus. Soc.
55 (3), 427e457.
Morrison, J., Schulte, P., Schenck, R., 2010. Corporate Water Accounting: an Analysis
of Methods and Tools for Measuring Water Use and its Impacts. United Nations
Environment Programme/Oakland: Pacic Institute, Nairobi.
(Accessed 12 January 2017).
NIBC Direct, 2017. NIBC Sustainability Policy Environment Policy Supplement. NIBC
(Accessed 4 October 2017).
Norman, W., MacDonald, C., 2004. Getting to the bottom of triple bottom line. Bus.
Ethics Q. 14 (2), 243e262.
Oh, C.H., Park, J.H., Ghauri, P.N., 2013. Doing right, investing right: socially
responsible investing and shareholder activism in the nancial sector. Bus.
Horiz. 56 (6), 703e714.
Pacic Institute, 2017. Exploring the Case for Corporate Context-based Water Tar-
gets. Pacic Institute, Oakland, USA.
context-based-targets.pdf. (Accessed 2 November 2017).
o-Signes, A., Segarra-O~
na, M., Mond
enez, J., Vargas-Vargas, M., 2013.
Inuence of the environmental, social and corporate governance ratings on the
economic performance of companies: an overview. Int. J. Environ. Res. 7 (1),
Rabobank, 2015. Annual Report 2015. Rabobank.
images/rabobank-annual-report-2015.pdf. (Accessed 12 May 2016).
Roca, L.C., Searcy, C., 2012. An analysis of indicators disclosed in corporate sus-
tainability reports. J. Clean. Prod. 20 (1), 103e118.
Rueda, X., Garrett, R.D., Lambin, E.F., 2017. Corporate investments in supply chain
sustainability: selecting instruments in the agri-food industry. J. Clean. Prod.
142 (4), 2480e2492.
Scholtens, B., 2014. Indicators of responsible investing. Ecol. Indicat. 36, 382e385.
Sumaila, U.R., Rodriguez, C.M., Schultz, M., Sharma, R., Tyrrell, T.D., Masundire, H.,
Damodaran, A., Bellot-Rojas, M., Rosales, R.M.P., Jung, T.Y., Hickey, V., Solhaug, T.,
Vause, J., Ervin, J., Smith, S., Rayment, M., 2017. Investments to reverse biodi-
versity loss are economically benecial. Curr. Opin. Environ. Sustain. 29, 82e88.
UN PRI, 2015. RI Transparancy Report 2014/5 ASR Nederland N.V. United Nations
Principles for Responsible Investment (UN PRI).
download_report/10040. (Accessed 5 May 2017).
UN PRI, 2017. Principles for Responsible Investment.
the-six-principles. (Accessed 25 October 2017).
Utz, S., Wimmer, M., Steuer, R.E., 2015. Tri-criterion modeling for constructing
more-sustainable mutual funds. Eur. J. Oper. Res. 246 (1), 331e338.
osmarty, C.J., Osuna, V.R., Koehler, D.A., Klop, P., Spengler, J.D., Buonocore, J.J.,
Cak, A.D., Tessler, Z.D., Corsi, F., Green, P.A., S
anchez, R., 2018. Scientically
assess impacts of sustainable investments. Science 359 (6375), 523e525.
WEF, 2017. The Global Risks Report 2017. World Economic Forum, Geneva. http:// (Accessed 11 January 2017).
World Bank, 2016. High and Dry: Climate Change, Water, and the Economy. World
Bank, Washington, DC.
23665. (Accessed 10 October 2017).
WWAP, 2017. The United Nations World Water Development Report 2017. Waste-
water: the Untapped Resource. WWAP (United Nations World Water Assess-
ment Programme), Paris.
247153e.pdf. (Accessed 10 October 2017).
R.J. Hogeboom et al. / Journal of Cleaner Production 202 (2018) 642e648648
... As the center of numerous water-related environmental challenges such as floods, droughts, and quality issues aggravated by overconsumption, cities are making considerable efforts to mitigate water scarcity and improve urban resilience with innovative solutions that require technology, governance, knowledge capacity, and reliable roadmaps [5]. However, the integration of water sustainability criteria into investment decisions remains a blind spot, evident by the unclear formulation of water policies [6]. ...
Full-text available
Cities face increasing water pressure and supply issues, jeopardizing the balance betweengrowth and sustainable water resource use. Green, resilient, smart, circular, blue, water sensitive,or water-wise city concepts are increasingly part of the design of strategies to rethink cities. Theseconcepts have motivated many studies, but little is known about their relative relevance amongthe scientific community and how they consider water circularity. The objective of this study is toassess how these city concepts incorporate water circularity principles. The assessment is based on abibliometric analysis of scientific articles recently published. The findings show that despite the widenumber of articles dedicated to the various city concepts, water circularity-related challenges are stilla small niche of concern, strongly driven by European authors. Moreover, our study showed thatwater circularity principles are not equally considered among the different city concepts. This unevenassimilation of principles in influential city concepts unveiled gaps regarding water circularity. Thisbrings a new perspective to the use of more integrated definitions, highlighting the importance ofsuch principles in the future use of these concepts when envisioning roadmaps toward sustainablewater use in cities
... Banks, shareholders, insurers and the financial institutions that own them currently enable companies to undertake economic activities, which in many cases are profoundly detrimental to the environment. The financial services sector has an especially critical role to play in the transition to a water-secure future (Hogeboom et al., 2018;WWF, 2019). Global financial institutions can offer unique, systemic incentives for change by ensuring that their investment, insurance, lending, rating and underwriting practices drive these water users to use water wisely, to not pollute water and to promote its reuse (WWF, 2019; CDP, 2020). ...
Full-text available
Climate change strongly influences freshwater supply and demand globally. Warming of ~1°C over the last half century globally has directly impacted the supply of freshwater through the amplification of precipitation extremes, more frequent and pronounced floods and droughts, increasing evapotranspiration rates, rising sea levels, and changing precipitation and meltwater regimes. Groundwater, the world’s largest distributed store of freshwater, is naturally well placed to play a vital role in enabling societies to adapt to intermittent and sustained water shortages caused by climate change. It is also essential to satisfy the increased demand for water in order to realize many of the United Nations’ Sustainable Development Goals (SDGs), including no. 2 (zero hunger), 6 (water for all) and 13 (climate action). Aquifers transmitting and storing groundwater can also contribute to climate change mitigation through the use of geothermal energy to reduce CO2 emissions, as well as the capture and storage of emitted CO2. This chapter reviews the latest understanding of the impacts of climate change on groundwater quantity and quality as well as the opportunities, risks and challenges posed by the development of aquifers for climate change adaptation and mitigation.
... This is unfortunate, as investing in, say, a large-scale avocado plantation in a water-scarce area today will have implications for consumption of local water resources for decades to come. A recent assessment by (Hogeboom, Kamphuis, & Hoekstra (2018)) confirmed that there is still a lot to be done to build investor awareness on the reality and potential impact of water crises, their role therein, and the development of sound, water-informed investment policies. ...
Community-based systems dynamics (CBSD) integrates members of the public into food systems modeling processes in order to shape food policy and effect systemic change. Food systems present policymakers with many examples of persistent and challenging problems–food insecurity, food waste, diet-related chronic disease, access to healthcare for food sector employees, and more. Viewing food systems as a commons, a shared and collectively governed resource, implies a need for collective, community-based decisions around food systems management and policy. CBSD specifically seeks to incorporate the lived experiences and wisdom of stakeholders and community members into the modeling process. Whereas other types of modeling processes invite feedback from the public along the way, CBSD participants build capacity in systems dynamics and collectively create systems models themselves. In addition, CBSD emphasizes empowering communities that have been historically marginalized within research and policymaking processes. Integrating lay members of the public into a modeling process presents practical challenges, but it also promises a shared vision of actionable and community-based policy changes. This chapter includes a practical overview of the CBSD modeling process, and provides a case study of foodNEST 2.0, a multiyear CBSD food system project based in Cleveland, OH that extends the CBSD model to incorporate a deliberative and situated systems approach.
... An increasing number of people are already experiencing stress for future water scarcity and, thus, opportunities emerge for forward-thinking investors to invest in water. The majority of the studies in the literature available highlight that water investments are always beneficial (Hogeboom et al., 2018;Pineiro-Chousa et al., 2020;Seidl et al., 2020). The recent launch of $ 1.1 billion water futures on the Chicago Mercantile Exchange in December 2020 reveals that the water market will play an essential part in the worldwide economic landscape downstream. 1 On the other hand, timber has recently come to surface as a trend of responsible investing. ...
Using a time-varying spillover approach, we investigate volatility spillovers between natural alternative investments, i.e. timber and water, and a battery of traditional instruments comprising equities, bonds, crude oil, gold, real estate, shipping and currency, for the period 1/1/2010-9/30/2021. Results show that the sample markets are moderately integrated and total connectedness escalated during stress periods. Moreover, we examine the hedging ability of timber and water by constructing optimal hedge ratios and portfolio weights. Both assets constitute an effective hedging tool for shipping, crude oil and bond investors, with the short position in the volatility of water to provide higher hedging effectiveness.
... Negara Indonesia menja min hal tersebut pada UUD 1945 pasal 33 ayat 3. Namun, permasalahan tentang peng gunaan dan pengelolaan air masih terjadi di Indonesia. Indonesia dan beberapa negara berkembang lainnya termasuk negara yang diprediksi mengalami krisis air di masa men datang (Endriana et al., 2016;Hogeboom et al., 2018;Sjaifuddin, 2020). Permasalahan air yang utama di Indonesia adalah pencemar an dan eksploitasi oleh industri. ...
Water Disclosure in Agenda-Setting Theory Perspective. This study aimed to examine several variables related to the agenda-setting theory on water disclosure. The method used was multiple regression analysis with a sample of 198 data on annual reports of public companies in the miscellaneous, basic, customer goods, agriculture, and mining sectors in 2018. This study found that the fairness and proportionality of news are often questioned by the public. In addition, many companies did not mention environmental costs. Therefore, the government had to establish sustainability reports as an obligation and cooperate with the mass media to help proportionate water disclosure.
Water is increasingly framed as a financial risk in equity markets. This article illustrates that this framing must be understood as a new aspect of the wider history of the financialization of the water sector. Unlike earlier instances, where water‐related services, or water risks are the primary subjects to be financialized, water itself is here being reformed to fit market logic. This article reviews, unpacks, and analyses the factors that have enabled, reframed, and defined water as a financial risk. As such, the article goes beyond simply reviewing what has happened, but also presents a critical analysis of why and how, and the potential effects this may have. Drawing on advanced theoretical perspectives from the social sciences, specifically building on the constitutive nature of language, the role of expertise in the knowledge‐policy interface, and the sociology of quantification, it proposes that the reframing of water into a financial risk is not a value‐free exercise. Critically, it shows that the value of water, at least as it relates to company activities, could be reduced to only embody those aspects which, in quantitative terms can be shown to affect Return on Investment. To alleviate this reductive process, an ambitious multi‐ and interdisciplinary research agenda must be developed moving forward to ensure that the multiple values of water are recognized and accounted for in equity markets and beyond. This article is categorized under: Human Water > Value of Water Human Water > Water Governance Water is increasingly defined as a financial risk. While this can spur financial institutions to consider water in capital allocation, perceiving water in this manner not only changes how water is viewed, but also how it is managed, with effects beyond the financial sector.
This chapter describes how to assess and reduce food systems’ pressure on global freshwater resources through the Water Footprint Assessment framework. First, we describe how to model the green and blue water footprint of growing a crop according to recent advances in the field of study. Second, we summarize methods to assess the environmental sustainability, efficiency and equitability of the water footprint of food systems. Lastly, we explore actions that both direct and indirect stakeholders can take to transform current food systems towards more water-wise food systems.
This chapter introduces the topic of water risk and provides an overview of the book. We define water risk as a challenge from water-related issues that may have both negative and positive effects. Water risk addresses financial actors (e.g., investors, financial managers, regulators, risk managers) as well as institutional parties (government, economy, society). We consider the relevance and types of water risk as well as frameworks for water risk assessment and management. In order to facilitate the understanding of the contributions to the book and to appreciate their value in a broader context, we suggest a more comprehensive concept that integrates the most relevant forms, pathways, and stakeholders in the water risk nexus. Overall, the book aims to provide a basis for the further assessment of water-related risks and the development of appropriate risk management techniques.
Ensuring sufficient quantity and quality of water resources is a necessary requisite for social well-being, economic prosperity, and environmental integrity. Water resources are continuously being threatened due to increasing population, economic activities as well as uncertainty posed by climate change. Moreover, risk to water security is a multi-dimensional construct of quantity, quality, access, and public perception that needs to be tethered together in policies and investments for a sustainable future. Given the wide social, economic, and ecological implications, it becomes necessary to conceptualize, assess, and manage interdisciplinary water risks as a means to ensure water security. As major users of this economically significant resource, businesses and financial investors fueling these businesses have a crucial role in designing sustainable water management practices by accounting for various water risks and response strategies. While existing literature on water disclosure and risk assessment highlights actions undertaken by businesses and investors in currently water-stressed regions, there is a gap in understanding current and future interdisciplinary water risks in regions perceived to be water-rich. Therefore, this chapter investigates different dimensions of water risk assessment, including an overview of current literature, gaps, and opportunities for sustainable water investment. Then using a case study approach, granular interdisciplinary water risk evidence is gathered for the Province of Ontario, Canada, and synthesized into a conceptual framework that can help design proactive decision support tools and guide the integration of sustainable water management principles in corporate and financial decision-making for a water-secure and sustainable future.
Full-text available
Objective: Water crisis is one of the greatest challenges that world population currently is faced with. Since the substance of water accounting procedures is changed in tandem with the complexity of the issues which businesses faced in their routine activities, it can be seen that rising in indicators used for management and water accounting is one of the most controversial accounting issues in the world. Indeed, despite various accounting systems throughout the world, none of them can contain all the necessary indicators conclusively. The aim of this research is to provide efficient indicators for water management accounting paradigm and to present a comprehensive pattern for this discipline as well in Iran. Methods: This study adopts the 6 modern dimensions of balanced scorecard and meta-synthesis methods to reach its targets. In doing so, based on searching the data on national and international databases during the period of 1980 to 2020, 32 particular studies which posit a direct relationship with water accounting and management have been chosen. Afterwards, these selected studies were entered into MAXQDA software for coding and further investigating. Results: There are 52 distinct codes base on the codding process that among them, the index of environmental efficiency (8), cost of water (8), volume of water exploitation (8), and index of used water (7) maintain the most importance with respect to the number of references, respectively. In the next step, these codes were classified into 20 themes and the themes are grouped into 6 concepts. Finally, a water accounting exhaustive model is provided by using the meta-synthesis method and is appovaled with the opinion of experts. Conclusion: Based on the evidence provided, the results of this research can be used by Professional accountants and planners in the field of water sources, accountants and managers in the regional water companies, and water and sewage urban companies, and related industries in Iran.
Full-text available
Reversing biodiversity loss by 2020 is the objective of the 193 countries that are party to the global Convention on Biological Diversity (CBD). In this context, the Aichi Biodiversity Targets 2020 were agreed upon by the CBD in Nagoya, Japan in 2010 and this was followed by asking a high-level panel to make an assessment of the financial resources needed to achieve these targets globally. First, we review the literature on the costs and benefits of meeting the Aichi Targets. Second, we provide a summary of the main conclusions of the CBD High-Level Panel (HLP) 1 and 2 on the Global Assessment of the Resources for Implementing the Strategic Plan for Biodiversity 2011–2020. A key conclusion of the HLP is that the monetary and non-monetary benefits of biodiversity conservation and sustainable use to be achieved by implementing the Aichi Targets would significantly outweigh the amount of investments required.
Full-text available
This article explores the role of financial markets for sustainable development. More specifically, the authors ask to what extent financial markets foster and facilitate more sustainable business practices. The authors highlight that their current role is rather modest and conclude that, on the old paths, a paradoxical situation exists. On one hand, financial market participants increasingly integrate environmental, social, and governance (ESG) criteria into their investment decisions, whereas on the other hand, in terms of organizational reality, there seems to be no real shift toward more sustainable business practices. The authors identify two main challenges within the field of sustainable investments that are relevant for entering new avenues that may help overcome this situation. First, a reorientation toward a long-term paradigm for sustainable investments is important. Second, ESG data must become more trustworthy. From a theoretical point of view, the authors finally highlight the potential market consequences when ESG investment criteria are used.
Full-text available
The financial community does not seem to have shifted to greater sustainability, despite increasing awareness and concerns around social and environmental issues. In this paper, we provide insights to help understand why. Building on responsible investment (RI) data from the UK financial press between 1982 and 2010, we examine the collective beliefs which financial actors rely on to take decisions under uncertainty, as a way of understanding the status of and implications for RI mainstreaming. The analysis of collective beliefs through five periods of RI leads us to define two theoretical dimensions – justifying RI and practicing RI—that characterize how mainstream actors collectively make sense of RI. Our analysis reveals that the RI collective beliefs currently (1) do not provide a favorable environment for RI mainstreaming and (2) need to be taken into account when discussing the value of sustainability.
This paper is based on the observation that there is a contradiction between the current demands for sustainability and the way the financial system works. Beginning with a discussion of the epistemological assumptions underlying financial theory, it seeks to show how it may be viewed as an Ideology for the financialization of economies and societies. We use the Ricoeurian notion of the cultural imagination to develop a counterpoint Utopia, which we call Finance As A Common. The reflexivity enabled by this Utopia reveals the mental structures in which financial actors are embedded. It also allows us to plot possible pathways for the reconstruction of the financial system, including local currencies, and the renewal of financial knowledge.
Private investments to address environmental issues are perceived as a powerful engine of sustainability. For the agri-food sector, multiple instruments have been developed to green supply chains. Yet little is known about the underlying process and conditions under which green sourcing concerns lead to the adoption of specific sustainability instruments among agri-food companies. This study: i) offers a synthesis of the most commonly used instruments agri-food companies adopt to promote sustainability in their supply chains; ii) proposes an analytical framework to elucidate how those decisions are made, based on the competitive environment in which firms operate—with respect to location of their raw materials, technologies available to their suppliers, leverage over upstream suppliers, and end-markets’ characteristics; and iii) presents seven case-studies illustrating the decision-making process leading to the adoption of a specific instrument by a particular company. Companies that do not have sustainable technologies available to improve their environmental practices but operate in highly sensitive places are better off taking their operation somewhere else. But companies with available cleaner technologies, effective law enforcement and control over the supply chains, as well as a brand to protect, can capitalize on their environmental efforts by introducing strict standards, such as third-party certifications. Enforcement of social and environmental regulations at countries of origin is a key factor that deters companies form adopting very strict standards, even if they have a brand value to enhance. The multiplication of private labels and initiatives are, in most cases, not driven by a desire to disorient the consumer, but rather by a careful consideration of the complex conditions under which agri-food supply chains operate. With minor adaptations, the framework could be applied to other economic sectors that have environmental impacts, from mining and energy-generating industries, to apparel, and electronics.
The corporate world is waking to the realisation that improved water management is fundamental for future prosperity and human well-being. This special issue explores aspects of its response: from the application of an array of analytical tools such as water footprint accounting, risk filters and standards; water use efficiencies; derivatives and insurance mechanisms; to collaborative infrastructure and watershed projects; stakeholder engagement and attempts to influence water governance at all scales. Drawing on the papers in this issue the motivations for this new agenda are traced and its potential in helping to unlock some of our most intractable water challenges, or to open a Pandora's box of controversies are considered. Key concerns include the potential for diverging corporate and public interests; policy and regulatory capture; privileging of economic over social perspectives; process inequities; displacement of existing water management priorities, and the risks of misguided interventions which undermine institutional and hydrological sustainability. Reflecting on these and the state of research on the topic eight priorities for a constructive response are discussed: closing the legitimacy gap; evaluating outcomes; reviewing evaluative tools; representation and inclusiveness; conceptual and methodological groundwork; outreach; and involvement and mobilisation. In conclusion, corporate engagement on water has great potential as both a progressive or reactionary force. Debate, research, scrutiny and action are urged to differentiate the 'good', the 'bad' and the 'ugly' and to pose fundamental questions about sustainability and equity.
Water is not only used in the domestic context, but also in agriculture and industry in the production of commercial goods, from food to paper. The water footprint is an indicator of freshwater use that looks at both direct and indirect use of water by a consumer or producer. The water footprint of an individual, community or business is defined as the total volume of freshwater that is used to produce the goods and services consumed by the individual or community or produced by the business.
A growing world population, changing consumption patterns and climate change are affecting water demands, water scarcity and water quality worldwide, while at present, few companies are incorporating good water stewardship. In order to create awareness on this issue and provide an incentive for companies to improve the water performance in their operations and supply chain, a method for ranking companies based on their water transparency has been developed. The method consists of a checklist that can be completed on the basis of information from annual reports, sustainability reports and websites of companies. This is the first time a ranking of companies regarding water transparency has been carried out. Results show that there are large differences in transparency between and within sectors and that companies are reporting more about their operations than their supply chain.