Norway's wealth fund, the biggest owner of European stocks, believes that environmental factors may sooner or later hit earnings and profitability of the companies it owns and sees its green ambitions as part its wider push for long-term profits.While this in itself isn't news (the fund has been pro-sustainability for some time), the latest addition to their list of environmental concerns corporations need to address is:
It's nice to see that European financial markets are recognizing the growing importance of sustainable water use. Will American investors follow suit? Just think of the advances we could make if major investors like CalPERS took similar steps... Of course, some forward looking U.S. companies are already responding to the issue. Let's hope more get on board soon.
Another new priority for the fund is dealing with water management, said Kvam, because continued availability of water resources will have a "huge impact" on how the Norwegian fund will develop in the decades to come.
Kvam said water was an important input or production factor for about 1,100 companies in the fund's current portfolio, whose combined market value is some $43 billion."The shortage of water and increased demand is going to create risks for huge amounts of companies going forward and we as investors need to know that the companies are managing these risks," she said in an interview.