Navigating Water-Related Financial Risks for Directors

This briefing serves as a guide for directors of financial institutions on the systemic risks associated with water insecurity and its implications for the global economy. It outlines the urgent need for financial institutions to address water-related financial risks, which are increasingly recognized as critical to long-term sustainability and resilience. The document emphasizes that water is fundamental to various sectors, including agriculture, energy, and industry, and highlights the significant economic value of water, estimated at approximately $58 trillion in 2021. It discusses the potential impacts of water-related risks, including a projected 40% global shortfall in freshwater supply by 2030, and the necessity for directors to incorporate water considerations into their strategic planning and risk management frameworks. The briefing also presents actionable steps for boards to adopt a systems approach, assess risks and opportunities, and ensure transparency in their water management practices, ultimately supporting both environmental sustainability and business resilience.