Monika Freyman, CFA, is responsible investment lead for Mercer Canada. She works with pension boards, trustee directors, CIOs, and C-suite as well international development and governmental agencies on environmental, social, and governance (ESG) topics, including climate change, water crisis, and social and governance issues. She conducts board education on ESG and climate change investment concerns for fiduciaries and helps institutions develop responsible investment beliefs and policies. She also helps them implement and execute on these policies and assists in the creation of benchmarking and reporting strategies for boards and committees. Freyman is passionate about educating and building capacity on ESG within the investment profession, including by supporting the CFA Institute.
The water crisis in Cape Town, South Africa, demonstrates that carbon emissions and climate change are not the only sustainability threats, says Monika Freyman, CFA. Water concerns already affect investors' bottom lines as well as future risks to their top lines.
Although investors are increasingly aware of water risks in their portfolios linked to agriculture, there is still work to be done to improve risk analysis and mitigation strategies. Several investors have begun by simply asking companies for better disclosure of agriculture supply chain risks.
Water risks can lead to unlimited financial impact and loss. Have you embedded water risk analysis into your portfolio management process? There are a number of increasingly sophisticated approaches that investors can take.
"Whiskey is for drinking; water is for fighting over." In these increasingly water-constrained times, this quote is as relevant as ever. The fact is water — or the lack of it — poses investor risks. Companies and investors can no longer ignore increasing competition over limited water resources.
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