By Andrei Skvarsky.
Financial consultancies Thomas Schumann Capital (TSC) and Anatase Ltd have developed, with support from financial markets data company Refinitiv, a family of indices to show whether the quantity and quality of water used by a company in its business pose any risk to its earnings and how serious such risk is.
The global, U.S. or EU version of the TSC Water Risk Index will provide an evaluation of water risk that shareholders are exposed to based on how their company uses and disposes of water, whether it has a water management policy, and how safe it is against environmental accidents.
While chiefly aimed at higher earnings, the TSC indices are expected to incentivise better corporate management of water resources and thereby to help reduce environmental damage.
“As climate change exacerbates droughts and flooding, and as population growth fuels the ever-growing demand for water, operating and financial risks to businesses will rise,” said TSC founder and chief executive Thomas Schumann.
In 2019 the World Economic Forum put water scarcity among the main global risks for the next decade. The World Wildlife Fund (WWF) says that, at the current consumption rate, two-thirds of the world’s population may face water shortages by 2025.
Investment solutions offered by TSC, which is headquartered in Delaware, have a strong emphasis on water security, while designing climate- and water-related indices is one of the services provided by London-based Anatase, whose founder and chief executive Markus Barth has more than 30 years’ experience in developing proprietary indices for all asset classes, mainly equities.
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