Norges Bank Investment Management, the arm of the central bank which runs the NOK2.9trn (€370bn) Government Pension Fund, has continued its strategic focus on water resources risk by providing more details on how it is ranking companies with water exposure.
It said water was a key factor at 865 of its portfolio companies at the end of 2010 – worth some NOK255bn.
Of those, Norges evaluated 432 to see how they fulfilled nine criteria for reporting on water management and water-related risks.
“The companies scored an average 2.7 out of a maximum nine points,” it said in a statement. “A total of 131 companies scored zero, while 10 companies got top marks.” It did not name the individual companies, although five high scoring companies were from the food and beverage sector.The information, which builds on analysis disclosed in NBIM’s first-quarter report, coincides with NBIM’s seminar on water intensive companies in Stockholm as part of World Water Week.
“Water may become an increasing cost that hurts profitability at many companies,” said Magdalena Kettis, head of social and environmental issues for the fund’s ownership activities. “This may in turn affect the fund’s investments.
“How companies manage and report on these risks will become increasingly important to investors as concern grows over water issues.”
In June the giant investor released a similar assessment of companies’ children’s rights disclosures. It found that Just nine out of 527 investee companies in sectors with high exposure to children’s rights/labour risks scored the maximum 10 out of 10 – and 232 rated zero.