World Water Day 2020: now is the time for investor action on water and climate change

By Mike Toulch, Senior Analyst, Shareholder Engagement and Policy

Each year, we observe the United Nations’ World Water Day on March 22. The theme of this year’s World Water Day was “Water and Climate Change” – a connection that fits neatly with SHARE’s work in recent years on shareholder engagement and policy work related to water. Water is perhaps the most important resource on the planet and we are facing a growing global crisis. It is the subject of conflicts, overuse, pollution, and depletion, issues that will continue to intensify due to climate change.

This year, World Water Day arrived in the midst of a global pandemic, where the most basic action we have been called on to take in recent weeks has been to wash our hands. Living in Toronto as I do, it is a given that I can turn on my taps and wash my hands using clean water from Lake Ontario, which has been carefully treated by city employees, and is regularly tested by public health officials to guarantee its safety.

Yet even today in the face of this crisis, more than 100 First Nations communities in Canada remain under boil-water advisories, putting these communities at even greater risk in the face of this pandemic. While the government bears responsibility for its continued failure to address the drinking water crisis affecting First Nations communities, business and investors have a role to play. Most obviously, ensuring that industry-linked freshwater contamination, such as the shameful long-term mercury poisoning at Grassy Narrows First Nation, never occurs. But we can also play a more constructive role in promoting and supporting the Indigenous economy, as outlined in SHARE’s work with the Reconciliation and Responsible Investment Initiative.

In recent years, SHARE has developed an engagement focus centered around the need to invest in water security, defined as “sustainable access to adequate quantities of water of acceptable quality, to ensure human and ecosystem health.” We have focused on aspects of the Canadian economy most vulnerable to water risks and on companies whose operations can have the most serious impacts on water quality and availability.

Oil and Gas Engagement

The oil and gas sector is highly water-intensive, and heavily dependent on water extraction and use to access and process resources. While the heated debate on pipeline development and the shape of Canada’s energy future rages on, companies in this sector must not ignore the impact that their operations and supply chains have today on drinking water supplies, local communities, and ecosystems. Across the oil and gas sector, however, a lack of transparency and consistency in reporting on water use and contamination remains, as do the water contamination risks associated with pipeline spillage across Canada’s expansive network of oil and gas pipelines.

To address these issues, our engagement has focused on both priorities: the pipeline safety and spill prevention measures that companies have taken in order to address those risks, as well as their measurement and reporting on water use and disposal. In a broad sense, we are asking whether companies can demonstrate that their businesses contribute to, rather than damage, the water security of the communities surrounding their operations and supply chains. Doing so has involved an ongoing dialogue with companies to improve their water management, such as through adopting performance targets and management systems that limit harm to water resources.

We have begun to see meaningful progress. In the past year, four of our six focus companies were able to demonstrate tangible improvements – lowering the frequency and impact of pipeline spills. 2019 also saw several focus companies make strides in their water-related measurement and disclosure, including first-ever reporting on key water metrics such as company-wide pipeline incident ratio and spill intensity rates. Some Canadian oil and gas companies also issued their first ever CDP Water Security Report, all of which allows investors to better track progress and hold companies accountable.

In 2020, our company dialogues will seek to enhance the standard of disclosure on water-related risks and management in order to build a benchmark across the oil and gas sector, against which improvements can be measured and progress can be tracked going forward. We will continue to use the widely supported CDP water information request as a guiding framework and ask more companies to respond to the CDP water questionnaire or align their reporting to the CDP disclosure framework.

In 2020, SHARE will also support recent developments in the resource extraction sector related to mine tailings management. Investors and companies have recently been collaborating on a new global standard for mine tailings as well as the first ever global database of mine tailings ponds (The Global Tailings Portal) both of which should help to assess and mitigate the risks associated with poor tailings management.

We look forward to marking World Water Day in 2021 having made significant progress on all of this work, both through SHARE’s engagement, and through our collective actions. One thing that COVID-19 has made clear is that there is enormous capacity for coordinated global action – when there is the impetus and will to do so.

(incidents per 1,000 km pipeline)

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