Companies are not moving fast enough to address the growing water-related risks.
That’s according to a report by CDP, formerly Carbon Disclosure Project, which added the cost of financial impacts related to water including is worth $14 billion (£11.2bn).
That includes drought, flooding, increased water stress fueled by climate change, tightening environmental regulation and the cost of cleaning up water pollution.
That’s more than five times the $2.6 billion (£2.08bn) reported last year by companies providing information to investors on their management of and impacts on water resources.
The report, launched at COP22 in Marrakech last week, collected responses from 607 companies. Around 60% said they tracked their water use.
It also revealed more than a quarter of companies experienced detrimental impacts from water in the past year and expect 54% of the 4,416 risks they identified to materialise in the next six years.
Much of the increase in water spending was related to Japanese firm Tokyo Electric Power Company (Tepco), which spent $10 billion (£8bn) in the past year to clean up groundwater pollution from its Daiichi nuclear power plant, damaged in the 2011 tsunami.
Water supply disruption cost African Rainbow Minerals $26 million (£20.8m) in lost revenues last year.
The report also highlighted the energy sector continues to be “the laggard industry” on water transparency as only 29% of power companies answered CDP’s survey.
It added ExxonMobil, Chevron and Royal Dutch Shell “are the three largest energy companies which, since 2012, have consistently failed to respond to investor requests for disclosure through the CDP”.
CDP’s CEO Paul Simpson says: “This year’s findings offer two clear lessons for the private sector. Firstly, that water risks can rip the rug from right under business, posing a serious threat to bottom lines. Secondly and crucially, that water will be a fundamental global commodity in the transition to a low carbon economy. Every drop of clean, sustainable water will be essential for the emissions reduction activities countries and companies have planned. This is a wake-up call to companies everywhere to take water more seriously.”