2nd Dec 2019 – Emily Woodland – Co-Head of Sustainable InvestmentHong Kong, China

The spectre of rising sea levels tends to dominate perceptions around the risk of climate change, but the more imminent threat may actually be a lack of water, rather than inundation.

According to the OECD¹ climate change is, to a large extent, water change, and the primary way through which the effects of climate change will manifest. How society deals with our dwindling supplies of fresh water is likely to dominate the geopolitical landscape in decades to come.

The UN Food & Agriculter Organisation² cites the disappearance of the Himalayan glaciers, source of the rivers that supply water to billions of people across Asia, and the potential loss of seventy-five million hectares of arable rainfed land in sub-Saharan Africa as just two of the many ways in which a changing climate will affect our water.

Lack of water now affects four out of every 10 people across the globe, and diarrhoea kills around 2.2 million people every year.³

As the driest inhabited continent, Australia in particular is no stranger to water shortages. Many citizens, particularly in rural Australia, have taken steps in their own lives to conserve this often-scant resource.

For those who keep a bucket in the shower to water the house plants, or turn off the tap whilst brushing their teeth, such efforts can seem a little insignificant in the face of such a momentous challenge. But for those who are prepared to take the same attitude to their investment decisions, there may be scope for a much more significant impact on the planet and your portfolio.

Action points

Investors may seek full transparency about water risks …