The Norwegian government pension fund has decided to get active in respect to water management. It plans to engage with companies to improve their management of water related risk and their reporting of this aspect of their activities.
The US Securities and Exchange Commission doesn’t require companies to disclose information about this issue. However, if this is a material issue to a company, failure to report its impact on the business may be viewed by the investment community as a sign that it is not disclosing its risk management practices as well as it might.
The sectors of particular interest to the fund are the food industry, agriculture, pulp and paper, pharmaceuticals, mining, manufacturing and power production, and the water supply industry. That’s a lot of companies, and a lot of competition.
Norges Bank Investment Management’s decision to focus on water management will increase awareness of the importance of this issue to sector companies and their investors. Companies that choose to go the extra mile in their reporting, demonstrating their understanding of this area, stand to gain a great deal.
