Climate pressures force businesses to count true cost of water

  • 20.10.2022
  • Financial Times

As companies’ costs mount in an era of inflation, the price of water may seem like a surprising area of focus: water tariffs have historically been so low that they are “almost just noise on a profit and loss sheet”, according to Cate Lamb, global director of water security at green disclosure group CDP. Yet, with climate change exacerbating both water scarcity and flooding, companies are moving water and its associated costs up their list of priorities. They are adjusting how they account for the commodity and, in some cases, even developing internal pricing mechanisms for it.

Yet, with climate change exacerbating both water scarcity and flooding, companies are moving water and its associated costs up their list of priorities. They are adjusting how they account for the commodity and, in some cases, even developing internal pricing mechanisms for it.

A survey by CDP found that, in 2021, 269 companies were using some form of internal pricing for water, up from 53 in 2017. And the number disclosing water-related data to CDP has ballooned to more than 3,300, from 176 in 2010.

But there is no global water pricing mechanism comparable to carbon credits — which means internal water accounting remains “an art rather than an accurate science”, says Lamb.