Companies face $397 billion in water-risk exposure, CDP report finds
Droughts and water stress at suppliers threaten trade routes and supply chains, yet more than a third of reporting companies have no process to assess the risk.
Companies expect about $397 billion in financial impacts from water-related risks, according to a report from CDP, the environmental disclosure nonprofit formerly known as the Carbon Disclosure Project.
The analysis draws on water disclosures from more than 6,500 companies. About $45 billion of the expected impact sits upstream in supply chains, and companies have already reported $1.4 billion in current losses from water disruption.
The report warns that as governments move strategic industries closer to home, water remains a fixed constraint. "You can relocate production but you cannot relocate a river basin," said Sherry Madera, CDP's chief executive.
Many companies are not prepared. More than a third of those reporting to CDP have no process to assess and manage water risk, including 21% of companies that have identified at least one such risk. Meanwhile, 39% say they are withdrawing from areas of high water stress, up from 27% a year earlier. About 60% of the water risks facing suppliers of companies in wealthier countries are in developing countries.
"Water risk is deeply material to many sectors but is not yet fully priced into capital markets," said Joe Ray, CDP's head of water. Global investment in water was about $300 billion a year in 2022, against an estimated annual financing gap of $700 billion, according to the Organisation for Economic Co-operation and Development (OECD).
This brief is based on reporting by Rhick Lars Albay, published Oct. 2, 2026, in Eco-Business. Read the original: https://www.eco-business.com/news/water-risks-threaten-trade-as-companies-face-us397-billion-exposure-cdp/
This article was produced with the assistance of AI tools and reviewed by an editor before publication.
