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.
India's agricultural woes, the appalling state of the world's oceans, "sin stocks," and reshaping market mechanisms, are just a few of the selections in this edition of Weekend Reads from India by Shreenivas Kunte, CFA.
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.
Environmental changes, population growth, contamination, and aging infrastructure are all contributing to water shortages. Solving such problems will require input from the for-profit and not-for-profit sectors. By targeting water initiatives, investors may find secular growth in municipal bonds, public and private company shareholdings, and exchange-traded funds.
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.
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