IN-DEPTH: Q&A with Ceres on water as financial risk

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An interview with Kirsten James, senior program manager at Ceres, on why water risk is coming into increased focus for investors. Kirsten, you work with both investors and companies in a bid to address the sustainability risks related to freshwater systems. Can you expand on the Valuing Water Finance Initiative – an investor-led effort being driven by Ceres? The initiative was launched about three years ago. We had been working both with companies directly and also with investors around the financial risks associated with various water issues and mismanagement of water and recognized that the scale and scope of the water crisis was increasing. With that in mind, Ceres helped initiate the Valuing Water Finance Initiative with a group of leading investors. The main aim is to engage with the companies that have a large water footprint and work with them to ensure that they're really valuing and acting on water as a financial risk, and to make the necessary changes to mitigate that risk and better protect freshwater resources. You mentioned that you're working with companies that have a large water footprint. What type of sectors are you typically engaged with on the topic in terms of mitigating that risk? I think it's fair to say that water touches every sector, but we did really work with the investors to focus on four sectors that we felt are extremely dependent on water and are impacting water resources through their business activities. One of these is the food and beverage sector. We see food and agri-business industries using more than 70% of freshwater globally to grow crops, feed livestock, process ingredients, etc. so this was clearly a sector where it made sense to engage. We are also focused on the high-tech sector. There are many water risks in this sector, throughout the entire value chain, from data centers to chip manufacturing to mining of metals. Additionally, we engage with the apparel sector where its entire value chain is exposed to water risk from the consumer who is washing clothes to the fields where they are growing cotton. How has engagement on the topic been evolving in recent years given the impact of extreme weather events and other issues? We’re seeing extreme weather play out in real time and it’s bringing a lot of these water resource issues to the forefront, whether it's record-breaking heat or extreme flooding or drought. From an investor engagement standpoint, we continue to see a growing group of investors that are interested in these issues and seeing the financial risks that are here now and the greater risks looking into the future. Investors have been working with companies on water risk issues for a few years now, in some cases, and so engagement has evolved from some of the lower-hanging fruit of ensuring that risk assessments are completed. As engagements mature, we see investors focusing more on mitigating risk in supply chains, as that is where the largest water footprint is and where the majority of the risk lies. Whether it’s pushing for those foundational steps like risk assessment and then moving on to supply chain, much of that engagement tends to take place behind the scenes. How have shareholder resolutions served as a lever? We have seen more and more water-related resolutions in recent years, and in 2025, in particular, we noted a number of shareholder resolutions related to water issues within the high-tech sector. This shows the growing interest of investors in the water risks associated with the growth of AI and the need for more data centers. We saw a resolution at Adobe requesting that the company assess their exposure to water-scarcity related risks and that was withdrawn for a commitment. We also noted various shareholder resolutions that brought water and nature together in how the resolutions were framed. There is a host of different demands that come up under that ESG umbrella. Do you still see proposals as effective in raising awareness and triggering change? Yes, I definitely see them as important in bringing these issues to the boards and C-suites of companies. The fact that several of these resolutions were withdrawn for commitment is also a positive sign that the investors were able to work with the company and negotiate a path forward. I think they continue to be an important engagement tool to highlight water as a financial risk and make progress on mitigating the risk. What can companies and indeed their shareholders do to address water risk for a more water-secure future? If we think about the supply chain, that is where the majority of those water risks lie. I think placing more emphasis and focus there is really important. Under the Corporate Expectations for Valuing Water, we worked with investors and other stakeholders to establish a framework with six expectations under a 2030 ambition. As we assess company performance against the Corporate Expectations, we are able to identify areas of best practice within supply chains. For example, some companies include different policies to buy ingredients and raw materials from suppliers that use more sustainable water management practices. Companies are also engaging with suppliers in different ways, providing education, technical support, and financial incentives for growers to use water more efficiently and reduce pollution. In October, we will be releasing the next iteration of our Valuing Water Finance Initiative benchmark. This will gauge company progress on how water risk is being mitigated. That will be a really important tool for investors to see how companies have progressed, where they're succeeding, and where gaps remain.