UNEP report informs financiers about power-water relationship

The opportunities available to financial institutions to encourage the adoption of best practices, which may include the introduction of eco-friendly technologies, such as membrane technology to recycle wastewater, are stressed in a report just published by the UN Environment Programme’s Finance Initiative (ENEP FI).

The report, the second in UNEP FI‘s Chief Liquidity Series, focuses on the Power Sector and was prepared by consultants Arup. Members of the UNEP FI Water & Finance Work Stream have collaborated to develop this briefing with a focus on a number of water-constraint regions: Australia, Brazil, India, South Africa and the Mediterranean Basin (Italy, Greece and Morocco).

Each country analyzed, the report says, was already experiencing areas of extreme water stress. The report finds that increasing water scarcity, due to climate change and higher demand, is posing material challenges for financial institutions in exposed sectors, such as power generation in water-scarce areas. By asking the right questions, says UNEP FI, financial institutions can play a role in carefully identifying and therefore minimizing risk exposure due to water availability.

To help financial institutions to better understand and mitigate adverse water-related risks related to their clients in the power sector, the report provides a number of Performance Indicators that can be used in relation to thermal power and hydropower.

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