Signatories to the UN’s Principles of Responsible Investment have expressed concerns over the environmental impact of agriculture on water systems and supply, prompting the organisation to launch an “engagement on water risks in agricultural supply chains”.
An engagement is a process lasting up to 18 months where participants effectively lobby companies of concern, that they might have investment interests in, to re-think their approach to various aspects of their business in line with PRI.
PRI, in collaboration with World Wildlife Fund, PwC Germany and the PRI investor steering committee on water risks – made up of a selection of PRI investor signatories that wanted to lead the engagement – published an investor guidance document earlier this month to guide this engagement.
“There isn’t a lot of information on this issue – it is difficult to understand how each company is affected by its supply chain issue,” said Paul Chandler, manager of investor engagements, environmental issues at PRI.
Many companies are simply not aware of the impact they have; “until something goes wrong they simply don’t seem to realise the issue”, he added.
PRI and the steering committee will now try to recruit other signatories to help target, or engage, 54 selected companies about their water policies, in a PRI working group. These PRI investors might have significant interests in the companies in question.
“We haven’t named specific companies as we like to keep engagement with them as consultative as possible and a relatively confidential process,” said Chandler. “And we think investors have the view that engagement is more effective when done out of the company domain.”
While UN PRI does not get involved in the investment decisions of its signatories, its Environmental and Social Themed Investing Work Stream explores how “environmental and social themed investments can form part of a well-performing portfolio, their wider connection to a sustainable global financial system and how they can benefit the environment and the society as a whole”, according to the website.