Managing Water Risks & Building Resilient Portfolios (Andera Partners)

Summary

• Water directly contributes to over 50% of global GDP through key sectors including agriculture, industry, and energy.p.4
• In 2023, 70% of listed companies reported being exposed to a substantial or severe water-related risk.p.4
• A single day of water supply disruption can result in costs ranging from €100,000 to €1 million at a critical industrial site.p.4
• The analysis revealed that 32% of capital invested by Andera Partners' funds is exposed to water quality issues, while 26% is exposed to water availability risks.p.10
• Although 33% of the 605 analysed physical sites depend on high-quality water, over 99% are situated in areas with robust sanitation infrastructure.p.11
• Only 5% of all reviewed sites require high water volumes and are simultaneously situated in areas facing high water stress.p.11

Key insights

1. Water usage globally accounts for 90% of agricultural and industrial goods production, making it a critical economic raw material rather than a mere externality.p.3
2. Companies currently contribute only 20% of total water infrastructure funding compared to households which account for 46%, exposing businesses to future polluter-pays financial obligations.p.4
3. Financial losses at industrial facilities caused by water risks fall into four core categories: operational, financial, regulatory, and reputational.p.6
4. Environmental pressures are currently represented by 7 of the 13 metrics in the analytical framework because they reflect direct tangible ecosystem impacts and are audited or regulated.p.8
5. Sector-based flooding risk is minimal in the portfolio, but geographic analysis shows that 21% of invested amounts are allocated to companies with at least one site in high flood-risk areas.p.10
6. Andera Partners identified 29 portfolio companies that are particularly exposed due to high water materiality combined with risk-prone operational locations.p.11
7. Four water-intensive sites situated in moderately water-stressed regions face elevated risk statuses by 2030 due to projected increases in drought occurrences.p.11
8. Half of all analyzed water-related issues covering quality, quantity, and pollution across the portfolio are deemed highly material.p.13