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Water - chances and risks for companies and investors | DWS ESG CIO View | March 2021 - YouTube
Channel: DWS Group
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welcome to our esg cio view
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climate changes back in the spotlight
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when we talk about responsible investing
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today water crisis are among the top 10
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risks in terms of likelihood
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and impact there are three major issues
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that are the causes for water scarcity
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firstly
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water resources are inherently scarce
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while three quarters of the earth are
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covered with water
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only 2.5 of it is fresh water
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and less than one percent of fresh water
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is available
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to sustain all terrestrial life in
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ecosystems
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secondly water consumption has increased
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more than twice as fast as population
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growth
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since the 1980s this is leading to ever
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increasing pressure on fresh water
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resources
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thirdly the planet's available water
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resources are
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under severe strain industry estimates
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that water pollution floods and roads
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cost the global economy around 1.9
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trillion dollars each year in economic
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social and environmental damages the
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consequences of water scarcity
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range from impacts on human health to
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shortages for key industries and
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ultimately undermining political
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stability
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agriculture is at the heart of the water
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stress problem
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the sector accounts for 70 percent of
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the world's total freshwater use
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mainly through irrigation however around
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60
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of this is wasted due to leaky
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irrigation systems
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and the cultivation of crops that are
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too thirsty for the environment in which
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they grow
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and the situation will probably continue
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to worsen
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currently an estimated 1.7 billion
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people
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in 44 countries suffer from chronic
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water shortages
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by 2050 about half of the world's
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population
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will live in a country where there is a
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chronic or recurrent shortage of fresh
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water
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the investment implications can be
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material
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they can lead to higher production costs
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higher reputational risks
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and even the loss of the location
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license for production companies
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at dws we had the intention to better
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understand
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the risks and opportunities around water
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and have developed our own water risk
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methodology
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the new rating combines information from
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four esg data providers
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and has been integrated into our climate
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and transition risk rating
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our analysis shows that companies with
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carbon and water opportunities
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have relatively outperformed the broader
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market during the first 10 months
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of 2020 at the heart of our mapping
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exercise is the question how water risk
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can impact financial performance and
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practice
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the two questions are is the company
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material exposed to water risk and
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how well can the company manage this
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risk
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our analysis show that companies with
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some of the highest
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and excessive water risks are typically
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found in the
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energy materials food and beverages
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sectors
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as well as among independent power
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producers in the utility sector
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companies with limited water risks are
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found in the financial
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health care communications services and
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transportation sector
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we have also been able to identify
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sectors where exposure to water could
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offer opportunities
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these opportunities tend to be most
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concentrated in industrial gases
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home improvement retail building
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products specialty chemicals
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and renewables our findings highlight
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that assessing water risks and
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opportunities
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as part of the investment decision
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making process is
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very important for all investors
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you
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