Investor-backed CDP teams up with Morgan Stanley for major utilities/water report

Environmental data body collaborates with investment bank on research

CDP, the environmental data body which acts on behalf of global institutional investors, has teamed up with investment bank Morgan Stanley on a major new report looking at power utilities and water.

‘Power Generation Utilities – Navigating Global Water Risk’ has been put together in a global collaboration between Morgan Stanley research analysts under Jessica Alsford, the head of Morgan Stanley’s Sustainable & Responsible Investment Research team and CDP’s water program. It includes a detailed contribution from CDP’s Cate Lamb and Charles Fruitiere.

The 40-page research uses information from CDP’s latest Water Report: From water risk to value creation, which came out last month (link). The report was written on behalf of 573 investors with US$60trn in assets.

The joint research points out that the power generation industry is heavily reliant on water as a resource. With around 90% of global power production depending on water, either directly or via the fuel supply chain, it is a “current and future strategic issue” for electric utilities.But deteriorating water security is already affecting utility companies; 38% of respondents to CDP’s 2014 survey reported water issues causing detrimental impacts to their business operations.

Lamb and Fruitiere write that ‘business as usual’ is no longer appropriate given the “scale, magnitude and variety” of water risks facing the sector.

But just 30% of the companies in the sector responded to the survey – “a cause for concern for all involved”.

In this context, “Investors have an important role to play in demanding information” on water risks and in particular requiring disclosure of a utility’s exposure to physical, regulatory and reputational risks.

Earlier this month, CDP, the former Carbon Disclosure Project, appointed Lance Pierce as president of CDP North America; he joins from US sustainability advocacy group Ceres.

Meanwhile, the Climate Disclosure Standards Board (CDSB), which is housed within the CDP, has launched corporate climate change reporting requirements for adoption by stock exchanges. The launch came at the Lima Stock Exchange during COP20 in Peru this week.