Water Index: Quantifying Water Investments

Published on January 7th, 2010 | by

Water is fast becoming a hot topic for every part of society, and in the coming decade, water will require new perspectives, more comprehensive information and innovative action. The World Resources Institute (WRI) is beginning an initiative, along with General Electric (GE) and Goldman Sachs, that will create a Water Index with the goal to accurately identify and measure water risk.

Photo Credit: lymangsr The Water Index from Goldman Sachs and GE will offer a statistical analysis of water-risk
The Water Index from Goldman Sachs and GE will offer a statistical analysis of water-risk

The Water Index will standardize attempts to identify and mitigate corporate risk in relation to water. The Water Index will aggregate around twenty aspects of water, from availability and quality to regulations and reputation issues. All information in the Index will be derived from publicly available information about scarcity and quality, with a major difference between this Water Index and previous attempts to quantify water-risk being the inclusion of elements not always considered in assessing water-risk, like regulatory issues and the impact of social and reputation issues.

“In many regions around the world, water scarcity from climate change and pollution is starting to impact a company’s performance, yet few analysts account for water-related risks. WRI hopes that investors will begin ‘pricing in’ these under-appreciated risks, driving investments to support more hydrologically efficient designs and technologies.” – Jonathan Lash, WRI President

While several Water Indexes like the S&P Global Water Index, ASE Palisades Water Index, and the ISE Water Index already exist, these indexes measure the performance of companies that operate in water-related business, while the WRI/GE/Goldman Sachs Index will measure risk associated with investment. The Index will allow companies and investors to view a comprehensive assessment of water-related risk and will enable more well-informed investment decision-making.

“Many environmental factors, including water, pose both challenges and opportunities for investors and businesses. The Water Index will provide valuable insights that can inform investment decisions and will help identify new opportunities across sectors and geographies.” – Tracy Wolstencroft, Goldman Sachs Global Head of Environmental Markets

Accurately, transparently and comprehensively assessing the risks could be a boon to investment in the right places at the right times.

“From a technology perspective, solutions to enable water reuse and mitigate risk already exist.” – Heiner Markhoff, President and CEO, Water and Process Technologies for GE Power & Water.

While it has always played an integral part in the life and success of any venture, business or not, water is taking on an increasingly important and therefore valuable role in the business of doing business around the world- and now there is a new comprehensive way to measure the risks and opportunities associated with those investments and innovations.


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