Norwegian pension giant seeks more detail in corporate water disclosures

(Updates with comment from CDP)
Norges Bank Investment Management (NBIM), the arm of the Norwegian central bank which manages the NOK4.6trn (€567bn) Government Pension Fund, has called for much greater detail in companies’ reporting of their water risks.

The giant investor wants more specific measurement and reporting at geographic, sector, company and site level via the CDP Water Disclosure initiative of environmental data body CDP, formerly the Carbon Disclosure Project.

“Granularity in the measurement and reporting at company and site levels is essential to understand the operational business resilience of companies to local water challenges and the relevance of risk mitigation strategies,” Norges says in a letter to the CDP.

The call – from NBIM’s Global Head of Business Risk William Ambrose and Senior Analyst Isabelle Juillard Thompsen – comes ahead of the release of the 2013 CDP Water Disclosure Report, which Norges has sponsored since 2009.
Norges, where water management is one of six strategic focus areas, also would like increased geographical coverage in the survey of emerging and frontier economies, saying companies located or active in the regions are gaining in importance in many investors’ portfolios.
The letter concludes: “The continued development of the CDP Water disclosure programme and risk reporting framework will support investors in their investment processes.”

The CDP water programme is modelled on its established process for carbon reporting and the number of investor signatories to the program has grown to 530 – representing $57trn.A questionnaire is sent to the world’s largest companies that are water-intensive or are particularly exposed to supply chain water risk. Company responses will not be ranked or scored in 2013 but the CDP is developing a scoring methodology to be piloted in 2014.

Cate Lamb, CDP’s Head of Water, said she welcomed the letter as it helped raise awareness of water as an investor and corporate issue. She added CDP had been talking with NBIM for around six months and that the organisation is already acting on many of the issues raised, for example there would be a revised questionnaire in 2014 and greater geographical coverage. She told RI the questionnaire has had around 590 responses so far this year, up around 55% on 2012.
The CDP Global Water Forum 2013 is being held on October 31.

It comes as the CDP has launched a report on climate change and UK companies called “Are UK companies prepared for the international impacts of climate change?”

It provides an annual update on greenhouse gas emissions data and climate change strategies at the UK’s top listed firms. This year 94% of companies in the FTSE 100 index and 74% in the FTSE 350 responded to the investor request for information sent by CDP.

The document features a look at the “Aiming for A” project initiated by CCLA Investment Management, the UK fund firm, and which includes the £115bn Local Authority Pension Fund Forum (LAPFF) and the largest members of the £12bn Church Investors Group.

“In a nutshell, we’re asking 10 major UK- listed utilities and extractives companies to aim for continuous inclusion in CDP’s Climate Performance Leadership Index (CPLI) by achieving and retaining an “A” Performance Band,” it says. It will involve filing supportive shareholder resolutions at some of the companies’ annual meetings.