Carbon Disclosure Project Establishes Water Accountability Index


Feb 16, 2011

The Carbon Disclosure Project (CDP) has established a water-management index in response to increasing requests for climate change and water information from investors, the non-for-profit organization said. 

CDP sent requests for climate-change data to more than 4,800 public companies on behalf of 551 institutional investors with $71 trillion in assets. New investors include Prudential Investment Management and State Bank of India.  

A number of water-related incidents are impacting water as an investment issue. This includes BP’s stock price dropping by 50% following the Deepwater Horizon oil spill and shares in the Zijin Mining Group being suspended from trading on the Hong Kong Stock Exchange after disclosure of penalties and costs associated with the firm's 2.4-million-gallon acid spill into the Ting River. 

Some of the institutional investors that are signatories to both CDP’s climate change and water information requests include Allianz Group, Aviva, BBVA, CalSTRS, HSBC Holdings plc, ING, Mitsubishi UFJ Financial Group and National Australia Bank.

A study by the University of California and University of Otago in New Zealand based on data from firms in the S&P 500 reports that the greater a company’s emissions, the lower its stock value.  

The FTSE CDP Carbon Strategy Indices have outperformed their UK benchmarks by 1.5% over a three year period, while keeping a low tracking error, according to CDP.  This means retail and institutional investors, such as pension funds, can achieve broad and diversified market exposure as well as manage the impact of climate change on their investment, CDP says.    

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