ISS this week began rating about 7,400 public companies on their water risk, a launch timed to coincide with World Water Day.
The ratings are based on 11 data points per company and are designed to assess its level of freshwater-related risk as well as its management of that risk, according to ISS. The water risk exposure classification is based on a company’s industry, geography and supply chain risks. The water risk management performance score, meanwhile, measures operational performance. Overall scores range from 0 to 100, indicating substantial or low and well-managed risks, the firm stated.
“Institutional investors can mitigate water risks across their investment portfolio by identifying industries and business activities that depend on or greatly impact water resources, and by actively engaging with company management to improve transparency with regard to water-related strategy and risk management,” the company said in its announcement on Tuesday.
The new rating will help investors “identify and manage freshwater-related risks in portfolios, build freshwater-focused portfolios, funds and indices, through to supporting their water-related stewardship and engagement programs.”
