December 16, 2008
Investors Call on World's Largest Companies to Join Water Sustainability Effort
by Robert Kropp
Alliance with assets of $1.5 trillion under management contributes to effort by the UN Global
Compact to expand membership in the CEO Water Mandate.
Since its launch in July, 2007, the CEO Water
Mandate has been endorsed by the chief executives of some 40 major corporations, who "recognize
that the private sector has an important stake in helping to address the water challenge faced by
the world today."
The challenges are considerable. Increasing water scarcity
results is the cause of a number of critical issues, which affect more than just businesses. "Lack
of access to clean water and sanitation in many parts of the world causes great suffering in
humanitarian, social, environmental and economic terms, and seriously undermines development goals"
as well, according to the Mandate. The Mandate calls for the adoption of its strategic framework by
corporations, and endeavors to assist companies in developing a comprehensive approach to water
The CEO Water Mandate was developed by the United Nations Global Compact, a strategic policy
initiative whose 5,000 member companies seek to align their operations and strategies with
principles in the areas of human rights, labor, environment and anti-corruption. Among the
Compact's objectives is the realization of the eight United Nations Millennium Development Goals, which
include the target of halving, by 2015, the proportion of the population without sustainable access
to safe drinking water and basic sanitation.
Calling the CEO Water Mandate "a most
promising initiative," Gavin Power, Deputy Director of the UN Global Compact, said, "We started the
Mandate in 2007 with the endorsement of five companies, and the number since then has risen to 40.
We hope to have 50 to 75 endorsements within the next couple of months, and we would like to see
more diversification in the industries represented in the Mandate."
"We have not been
inundated with companies looking to join the Mandate yet," continued Power. "But membership is a
natural extension of membership in the Global Compact itself, especially as issues of corporate
water footprint and responsibility for water usage in the corporate supply chain gain visibility."
The Global Compact's ambitious recruitment goals for the CEO Water Mandate have found an
ally in a group of investors that manage assets in excess of $1.5 trillion, which has called upon
100 of the world’s biggest companies to join the Mandate.
The 16 signatories to the
letter to the companies include leading European and North American institutional investors and
asset managers such as Connecticut Retirement Plans and Trust Funds, Calvert, Robeco, and F&C
Management Ltd. All are signatories to the United Nations' Principles for Responsible Investment , whose mission is based on
the premise that consideration of environmental, social and governance (ESG) issues is proven to be
a successful method of delivering superior risk-adjusted returns.
Among the targeted
companies are Starbucks, GlaxoSmithKline and Carlsberg Group. In the letter sent to the chief
executive officers of the companies, the investors contend that companies that manage the risks and
opportunities presented by limited global water availability are more likely to be viable long-term
According to James Gifford, Executive Director of PRI, "Most businesses,
whether large or small, use water to varying degrees in the production of goods and services. The
emerging trends of a growing global population, increased agricultural and industrial water demand,
and declining water availability mean that over two-thirds of the world's population, including
businesses in these communities, face the prospect of water scarcity by 2025. For investors, this
issue poses real and material risks, but it also presents opportunities for new investment. The CEO
Water Mandate is an important initiative seeking to address the risks around water scarcity in the
corporate sector, and I am delighted that investors are sending a clear signal to companies that
this issue needs to be addressed as a priority."
Calvert, one of the investor signatories to the letter,
occupies a unique role in the CEO Water Mandate. Not only has it joined in the challenge to the
world's largest companies to embrace the tenets of water sustainability; it is an endorser of the
Mandate as well. In fact, at present Calvert is the only investor to endorse the Mandate.
As Bennett Freeman, Calvert's Senior Vice President of Social Research and Policy, explained,
"As we prepared to launch our Global Water Fund in October, we recognized it was time to increase
our commitment to advocacy for water issues, so we joined the Mandate in July. Thus far, we've
participated in discussions in which we've focused on a human rights perspective. We plan to work
to promote greater corporate transparency and disclosure, and to ensure access to and affordability
of water resources."
Freeman cited the work done by the Pacific Institute, a California-based nonpartisan research
institute whose three main programs of research include water, community strategies for
sustainability and justice, and globalization, and whose water policy recommendations have provided
crucial research for Calvert's investment philosophy.
Lily Donge, Senior Analyst for
Social Research at Calvert, referred to the cross-collaborative nature of the investor alliance, in
which investors on both sides of the Atlantic have joined to make "an explicit request for dialogue
with companies in order to ensure progress," she said.
Freeman added, "As a long-standing
member of PRI with a history of alignment with organizations to address environmental issues, we
hope that other investors will soon join us in endorsing the CEO Water Mandate."