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Water Affects Your Pension:
Cate Lamb at World Water Week

Can water risk disclosure move the needle on corporate water stewardship? And what does it have to do with our own retirement funds? In this very special episode of What About Water? – recorded on location at World Water Week – Jay sits down with Cate Lamb in Stockholm, Sweden to discuss valuing water. We hear how companies with high water-related risks affect our own bottom line, and how pensions hang in the balance when the value of those companies erode in the face of climate change.

Cate Lamb is the Global Director of Water Security for CDP, a non-profit organization once dubbed “the most powerful Green NGO you’ve never heard of” by the Harvard Business Review. CDP urges large businesses to disclose their environmental risks and reduce their water footprint, using the influence of investors to catalyze change. In a report released just last year, the NGO found that the cost of water risks to businesses could be over five times greater than the cost of taking action now to address those risks. CDP currently has around 3,500 companies that voluntarily disclose, and a group of 680 investors with $130 trillion dollars in assets pushing for that information.

If you have any ideas, questions or comments for our new ‘Ask Jay’ segment, email us at ideas@whataboutwater.org and you might hear your question in a future episode.

Guest Bios

Cate LambCate Lamb

Cate Lamb has almost 20 years of experience in all aspects of sustainable development, corporate engagement, and team leadership.During her tenure as Global Director for Water Security at CDP, Cate has built the world’s largest coalition of non-state actors working to deliver a water secure future. Today, 680 financial institutions controlling $130trillion in assets use Cate’s program to gather water-related data from over 7,000 of the world’s most impactful companies. The data disclosed provides unique insights into the water-related risks, opportunities and impacts these companies have both today and into the future. This data is a public good and it, alongside the annual corporate water action benchmarks, are distributed throughout the economy to incentivise action and enable better decisions that drive the reallocation of capital towards those businesses valuing water and away from those that don’t.

In addition to her time at CDP, Cate is also a strategic advisor to the UNFCCCC’s High Level Climate Champions, the Co-Chair of the Science Based Target Network Council, a knowledge partner of the TNFD, a founder of the Fair Water Footprints Coalition and an advisor to Stockholm World Water Week.

Photo Credit

Cate Lamb – Submitted

Full Transcript

Cate Lamb:
Financial institutions, mainstream pension funds, asset managers, commercial banks and insurance companies, these firms collectively control hundreds of trillions of dollars, and that money is currently being directed towards activities that undermine our ability to achieve our objectives as a society, particularly on an environmental perspective.

Jay Famiglietti:
I’m Jay Famiglietti, and this is What About Water?

So standing here outside the beautiful Norra Latin Building in Stockholm, Sweden for World Water Week 2022. It has been an awesome time so far. We’ve got so many different sectors coming together; nonprofits, NGOs, research, academics, government, water ministers, really amazing transdisciplinary event. And it’s also cool to be able to say that several of our former What About Water? guests are here. Sandra Postel was just recognized for her 2021 Stockholm Water Prize for her work on nature-based solutions. Felicia Marcus is here, the former hair of the State Water Resources Control Board in California. Henk Ovink is here, he’s the Water Minister to the Netherlands. So really a place where so many water leaders are crossing paths and talking about solutions for water sustainability for the future.

This year, there’s a big focus on valuing water, which is super important, because as most of us know, water is undervalued and therefore we don’t really respect it, and we contaminate it, and we overuse it. So this year, this focus on valuing water and also valuing what we don’t see, valuing things like groundwater, is really new.

The meeting to me feels more vibrant than it has in years past. Also, feels to me like there’s more urgency this year, and that’s probably because of climate change, and the things that are happening around the world with water; droughts in the southwest, flooding in Pakistan, all this stuff is happening in real time. There’s also a new emphasis or emerging emphasis on corporate water sustainability. So another leader in that field, Cate Lamb from CDP is here, and we had a great discussion with her on Monday afternoon. We are here at World Water Week in Stockholm, and I’m with Cate Lamb, who’s the Global Director of Water Security at CDP. Awesome to have you.

Cate Lamb:
Thank you. I’m really pleased to be here.

Jay Famiglietti:
So the meeting is actually quite active.

Cate Lamb:
Yeah, there are other people here at World Water Week.

Jay Famiglietti:
There are other people. It’s not just-

Cate Lamb:
We’re not the only one.

Jay Famiglietti:
… the two of us. It’s actually pretty vibrant. In fact, I think it’s a little bit more vibrant than I’ve seen in years past. Do you feel that way?

Cate Lamb:
Absolutely. In the last few years, they hosted it in a humongous football stadium and that-

Jay Famiglietti:
I was there.

Cate Lamb:
… tended to kill the vibe a lot. There was a few people there, but because it was so vast, it was hard to really see them and feel them but this is back in the old venue and there’s something about in-person.

Jay Famiglietti:
I think there’s a really good energy. In fact, part of the reason why we had to come over here and find a quiet place is because it was so noisy in the building across the street. So I think that’s a really positive development, and I can imagine that this meeting is only going to get bigger.

Cate Lamb:
I hope so. Let’s support SIWI in getting a bit bigger.

Jay Famiglietti:
Absolutely. And personally, we were just talking about how there’s not many university professors here, not many academic researchers. And I would like to try to increase those numbers and get more people like me thinking across disciplines, thinking outside the universities and working with people like you at the CDP. You’ve got what sounds like a pretty cool job. You clearly enjoy it, you’re super passionate about it. But how did you get to where you are today?

Cate Lamb:
How did I get to where I am today? I mean, it’s an interesting question. I would view my career path more as a jungle gym rather than a career ladder. And it’s been somewhat happenstance. And yes, I love my job. I’m a committed individual and it’s given me a huge platform from which to become a water leader in this space. I’m really grateful for that. But I started on a duck farm in the middle of rural England working with farmers and with duck manufacturers, slaughter house owners who were completely unaware that they had a water problem and they wanted me to implement ISO 14001. That was the task that they were set to me as a new green, fresh, young thing out of university. Yes.

Jay Famiglietti:
ISO what? 14001?

Cate Lamb:
Sorry. There’s a fair amount of jargon in this space.

Jay Famiglietti:
What is that?

Cate Lamb:
It is an international standard that a company can deploy and get certified against to demonstrate that it is managing its environmental impacts in the best possible way. So a factory might deploy the standard, have a look at it, and it tells them how to manage their wastewater, how to meter the water that they’re using, how to monitor and meter the energy that they’re consuming and how to manage their waste. And then an independent assessor would come in and check that the company are taking the appropriate actions relative to the standard and give them a big tick. And so it’s a very useful way of getting that independent verification that the company is doing what it is claiming to do in its public reports.
And well, long story short, they were not in the condition that you would have expected a company to be. And my rose-tinted glasses fell off and I suddenly thought, “Hang on,” this company in particular and no doubt all of the other companies in that sector were not valuing the resource in the way that they should, did not fully understand the implications of a changing water environment for their business and were at risk.
And so then I eventually pulled them into line to some extent, but then moved into consultancy, and I was getting a bit of an itch. The working in a consultancy on a project by project basis was just not satisfying my awareness of the global climate and environmental catastrophe that we were facing and I needed to find something else. And I knew that the NGO space was probably where I needed to be, but I’m not a traditional person to sit within a more activist NGO. I couldn’t imagine working for WWF, for example, at the time, and I couldn’t have imagined working for GreenPeace. I really believed that business needed to be, yes, they were part of the problem, but if we were to succeed, they need to be part of the solution.
And then I saw Nigel Topping, who was the chief innovation officer for CDP at the time, presenting at a breakfast briefing, and Nigel was presenting and I’ve got the notes still at home. I need to work for Nigel. So I went home, I looked on the CDP website and saw that there was a water role, and well, the rest of history.

Jay Famiglietti:
Wow, cool. Cool.

Cate Lamb:
So serendipity really that took me here. But I’m really glad that I was able to find it.

Jay Famiglietti:
I mean, we’re all glad because you are clearly a force, and so glad that you’re here and doing the job that you’re doing.

Cate Lamb:
Well, thanks.

Jay Famiglietti:
Can you tell us a little bit about CDP?

Cate Lamb:
Yes, I can. And I’m really delighted to, because it’s not an obvious institution in the water space. In fact, we were once branded in the Harvard Business Review as the most influential green NGO that you’ve probably never heard of.

Jay Famiglietti:
Wow.

Cate Lamb:
So you’re not alone and your audience is not alone in not understanding or perhaps never hearing who CDP is. At the core of CDP’s objectives over the last few years is really toward science at the heart of business decision making and financial decision making. And so the fact that there aren’t enough scientists in your perspective at one of the leading world water events is a concern and something that I think there’s huge value in addressing and making sure that the latest academic thinking and rigorous scientific thought is coming through and informing ultimately the next year, two years, five years.
It used to be known as the Carbon Disclosure Project, but not anymore, because we expanded beyond carbon. And we are an organization that works to stem the global climate crisis, the global water crisis. And we work to hold deforestation and protect ocean health. So our bosses, in a sense, the people or the beings that we answer to are the ice caps in Greenland and the Amazon River across Brazil and other countries. The way in which we operate is recognizing that large multinational corporations and the investors that fuel them have a significant impact on these critical environmental areas. And so we provide a reporting mechanism or a way in which we hold those institutions to account to reduce their impacts on those environmental areas. We’re not a household NGO in the sense that a WWF might be or a TNC, so most households wouldn’t have heard who we are, but you can guarantee that a large proportion of international businesses, international finance institutions definitely know who we are, because they are our target audience.

Jay Famiglietti:
So yes, you’re focused on the financial sector and working with certain companies and using investors to help drive this transformation.

Cate Lamb:
Exactly. Around 20 odd years ago, the Kyoto Protocol was signed, and I was in Canada at the time when it happened, and I remember feeling a sense of real joy and optimism. However, there was a moment of recognition that most national governments cannot influence the way in which major multinational corporations function. The decisions that they take to grow supersede any one national government. And yet, in order to achieve the outcomes of the Kyoto Protocol and the next generation of climate agreements with the Paris Agreement, multinationals need to play a significant role, multinational companies. So how do we influence them and how do we change the way in which these businesses function, the way in which they choose to grow, the products and services they put on the market. As I say, national governments aren’t necessarily in a position to be able to do that, so an alternative institution that can play that role. Financial institutions, mainstream pension funds, asset managers, commercial banks, and insurance companies.
The banking sector alone controls around $148 trillion of assets every year. And so there was a moment within CDP’s history where they recognize we need to get these actors active, but what they were missing was data. They didn’t know what the carbon footprint was of the companies that they were investing in. And so the theory of change that sat behind CDP and still does to this day, is that by driving transparency of, in that instance, the carbon footprint of a company and giving that to an investor, the investor could then make a more informed decision and allocate its capital towards those firms that have got a lower carbon footprint than those that have got a higher carbon footprint.

Jay Famiglietti:
But the average person would never make that connection that not only is it important for the earth and for the environment, but it actually impacts their own pocketbook through their pension.

Cate Lamb:
Absolutely. And it doesn’t take a huge leap to understand that a lot of people’s pensions are invested in stocks that are likely to have a shelf life. So why should your brother and your grandmother and your father care about this topic is much of their pension funds, much of the money that they are going to be and are relying on at the moment is used to fuel those businesses and to enable those businesses to carry on doing what they’re doing. And so we want to put that money to work to make sure that it’s going towards those companies that are doing well, encouraging them to continue to do well and move it away from those companies that are doing less well. If your pension is currently invested in oil and gas and the oil and gas no longer has a future in our economy, and therefore those oil and gas companies are either going to transition into something really successful and really beneficial for the planet, or they’re going to fail, your pension is at risk.
You’re going to potentially lose value of your pension if the value of those those companies or as the value, so not if, when the value of those companies erodes, and they are eroding today. And in fact, water insecurity has a similar intervention or a similar effect on corporate profitability. So those firms that are failing to address their water impacts are exposing themselves to risk of failure. And as a result, their share price will plummet, their ability to generate capital or gain access to capital is depleted. And in response, that is felt in the share price and the pension value of ultimately your grandfather’s pension. It’s a huge risk.

Jay Famiglietti:
And my pension and yours.

Cate Lamb:
And yours. Yes. Yeah.

Jay Famiglietti:
And yours.

Cate Lamb:
Yeah, exactly.

Jay Famiglietti:
So it sounds to me like then what you’re doing is sending out questionnaires. Is there a requirement that a company has to respond?

Cate Lamb:
No. So it’s voluntary, but the questionnaire, CDP isn’t issuing it on behalf of CDP. We are issuing it on behalf of those institutional investors I mentioned earlier. So we go out, and we’ve done this since the beginning of the program, to cultivate relationships with financial institutions and in a sense, seek their permission, seek their approval to issue the questionnaire to the firms. We now have a group of 680 financial institutions with $130 trillion worth of assets, and it’s on their behalf that we issue that questionnaire.

Jay Famiglietti:
It’s hard for me to wrap my brain around 130 trillion. I’ve kind of lost track of the zeros.

Cate Lamb:
Yeah. They’re a very powerful group. Let’s just leave it at that.

Jay Famiglietti:
It sounds that way. So what kind of questions are in the questionnaire?

Cate Lamb:
It’s a very comprehensive one and designed for two purposes. And I’ll get to the questions, but let me give you the philosophy behind it. So the first purpose we designed the questionnaire for is to elicit data that is useful for the market. Something that would be useful for you as an investor to make an informed decision. The second reason for the way in which we design the questions and the choices behind which questions are asked and which indicators attract, is because we want to change behavior within the companies themselves. So if you imagine you’re a first-time responder company that’s never considered water before, for example, and you have 680 investors sending you a questionnaire that asks, amongst other questions, “Are you exposed to substantive water-related risks that would generate a substantive change in your business?” and you have to say, yes, no, don’t know, it forces the chair of the company, because these questions are sent to the chair in the first instance.

So first of all, consider, well, “Who is CDP and why should we respond to this?” And then they realize, “Oh, hang on, it’s come from this really large group of investors. Maybe we should pay attention to it. What does it mean? What is a water risk? What data do I need to collect and to interpret in order to understand what my risks are? And more importantly, where’s the key to the meter room, because I’ve completely lost track of which water I used, where it’s coming from, who else is dependent upon it? What is the importance of a river basin? Who cares about the collective action and community? Is that a necessary requirement?” It sparks this dialogue and this process within an organization that before we’d sent that information request was not happening at all. And so that’s one of our most powerful questions.
Another is associated with CEO remuneration. Another that I’ve designed is around value at risk per river basin. So if you consider the fact that most companies account financially on a national basis or a longer product line, they never quantify how much revenue is generated in a river basin. Now, why does that matter to us as water professionals and water scientists? Well, we know that the health of the river basin is synonymous with the health of the business. And if the river basin writ large is unhealthy, is in a very poor state, whether it’s over-polluted, over-abstracted, then the business itself is failing, is going to fail, irrespective of how efficient that business is. And so we needed to create a question that helps bring that basin into the boardroom, but also into the finance department, because putting a price on the value of that river basin, making sure that the company understands that billions of dollars of revenue are generated and depend on the health of that basin makes them much more likely to invest in the health of the basin. That for me is one of the more exciting questions.

Jay Famiglietti:
Yeah. Really. No, that sort of health of the basin and the health of the company is a great perspective, and one that I’m not sure is well-appreciated. Certainly not super appreciated on the academic side. I mean, we’ve got so much to give to help quantify the health of a river basin and what’s happening and projections and where a basin has been and where it’s going, and the status of all of its water and its forest and its carbon, and it’s being totally underutilized. So that leads me to my next question, which is, if you’re a company, how do you get that kind of information?

Cate Lamb:
Before we move on that question though, based on the information that you’ve just shared, it’s hugely valuable, right?

Jay Famiglietti:
Yeah.

Cate Lamb:
So some of the questions we ask around current business practices, “How much water did you consume this year? How has that changed since last year?” But where we’re taking the questionnaire over the next few years, is there associated with, “Where is the business going?” Because quite frankly, in order to trigger the transformation that we want, we need businesses to completely change the trajectory of their water use right now. We need them to radically reduce their consumption and eliminate-

Jay Famiglietti:
I’m glad you’re saying that, because I don’t say those sorts of things, but I see those sorts of things in the data, that if we don’t radically change the way we’re going, then this trend is going to keep going like this. And that means we’ll have no more groundwater.

Cate Lamb:
Exactly. And people are preparing for that future. I don’t want us to prepare for that future. I want us to be aware that that future potentially exists, but paint a picture of the future that we want and begin to chart our approach together.

Jay Famiglietti:
So okay, we’re talking about a lot of water metrics. Do we have any metrics of how the financial sector is doing in driving this transformation? Is it too soon?

Cate Lamb:
It’s nascent, I’d say, because we are not necessarily tracking those right indicators. My team and I have developed a series of them that will be implemented into our questionnaire for next year, and they will remain. And these are indicators associated with… We call them forward-looking indicators. So, “How much water are you anticipating using in this particular facility, in this location next year, in the next 10 years, in the next 20 years? What revenue are you generating from water smart products?” Which we’ve not yet defined, and we need the world to help us define that. “And how does that compare to revenue generated from non-water smart products? What steps are you taking to eliminate and transition away from hazardous chemicals? How are you transforming your business to make sure that you’re no longer using those? What innovations are you deploying?”

And so bringing this new generation of indicators and questions into the questionnaire allows us, I think, and I hope to change the dialogue within firms and help them understand that this is not about incremental improvements in the basin and at every factory whilst you continue to do what you do, this is about fundamentally changing what you do so that you can succeed in the future. And if you are not moving with the times, and you are not transitioning sooner rather than later, than it will be too late of a risk, a really unequal transition to a water secure future.

Jay Famiglietti:
So how is this going? Do you interact with CEOs directly? Are there… I don’t know. If I had to guess, I would say hopefully there’d be some that are really on board just because they know it’s important. And maybe there’s a bunch that just don’t want to. What are you experiencing?

Cate Lamb:
So we started the water program in 2010. We had about 150 companies that disclosed at that point. And we had around a similar number of investors that had said, “Yes, okay, we think we might want this information. Go ahead and collect it for us.” Today, we’ve now got around three and a half thousand companies that disclose, and we’ve got 680 investors telling us that they want the data. So from that perspective, things are looking great. They’re not good enough however. There are many more companies in the world that are not disclosing. So we invited over 7,000 this year. So 50% chose not to provide the information to their investors.

Jay Famiglietti:
Wow. Wow.

Cate Lamb:
And that is not okay.

Jay Famiglietti:
Wow. No, that’s not okay at all.

Cate Lamb:
And what that means is ultimately the market remains at risk. We have the Network for Greening the Financial System, which is a coalition of 66 central banks that have just recently come out and stated that the destruction of nature and biodiversity, of which freshwater accounts for a huge proportion of that loss, poses a financial stability threat to economies worldwide. It’s a really important moment, and it went under the radar, but it was an important statement that they made, because once a central bank acknowledges that there is a financial stability threat to their economy, they are obliged to act. And they’re obliged to introduce fiscal and regulatory policies that enable financial institutions to manage these risks.

So when companies choose not to disclose water-related data, those financial institutions that are responsible for managing yours and my pension pot don’t have the information they need to do that in a way that ultimately allows them to succeed and allows us to remain confident pensioners in our old age, some of us a bit close to that than others, Jay. And so it’s vital. I think what we’re going to see is a move within the central bank space to mandating water reporting. So it will become a legal requirement. So whilst you asked earlier, are companies required to, some will cringe when I say that it’s voluntary, because there is more of an expectation now and a pressure, a peer pressure to disclose.

Jay Famiglietti:
But I think that’s very positive.

Cate Lamb:
We’re now being invited and asked to come to show the report with major asset managers and their teams finally.

Jay Famiglietti:
That’s fantastic.

Cate Lamb:
So we go to Morgan Stanley, there with 30 or 40 of their analysts to tell them, “This is what this report is, this is what the research is, and this is why you need to push for disclosure, or in addition, push for action from these firms,” which looks like setting targets, establishing a plan that transitions them away from very intensive, impactful business models and towards much more sustainable water light, again, to be defined, business models that are succeeding into the future. But of course, it’s incredibly complicated. There will no doubt be unintended consequences that we will hit along the way. This concept of the just transition is one that weighs on me a lot, and thinking about, how do we ensure that certain decisions that are taken either by financial institutions or by companies do not unjustly affect poorer communities or farmers? And I would say that farmers probably are one of the more vulnerable segments of society from a water-secure perspective.

Jay Famiglietti:
Absolutely.

Cate Lamb:
Because if a company decides that they’re going to pull out that water-intensive crop in that location in order to reduce their supply chain risks, what happens to those farmers and their community and their families? And whilst in a very simplistic way, the company will look great and will be able to make a claim that they’ve eliminated the impact of almond farming or avocado farming because they’re no longer doing it, those farmers still exist and those commodities still exist. And so thinking through carefully how we manage that transition in a sensitive way and making sure the companies are paying attention to that and investors are paying attention to that, I think is a vital aspect that we can’t afford to ignore in the next few years.

Jay Famiglietti:
Yeah, that’s interesting. That’s not just, is there enough water to grow food? But what about the whole food system? What about the workers? What about the upheaval? But you have to think it through like, what happens to these people?

Cate Lamb:
Yeah.

Jay Famiglietti:
So really, really important. I want to close. What do you feel about the time scale of the transformation, you know, the pace? So you hope to drive change as soon as possible.

Cate Lamb:
Yeah.

Jay Famiglietti:
Do you feel like companies that don’t engage will get left behind?

Cate Lamb:
Absolutely. Either left behind or they’re facing litigation threats or they’re facing reputational and regulatory.

Jay Famiglietti:
Regulatory. That’s what I was thinking about.

Cate Lamb:
And these threats are real and increasing. Whether the companies choose to acknowledge them or not, they are happening. And I think with an empowered youth base, with an empowered consumer base, and now a much more empowered investor and financial institutional base, their companies will be forced, in a sense, to come into line and seize the many opportunities that exist. There’s a saying, nothing’s more powerful than an idea whose time has come. So I think we’re in a very unique position where we can leapfrog. It’s not going to be tomorrow, but I could confidently state that in 10 years time, if we come back to World Water Week again, things will be radically different.

Jay Famiglietti:
We have been talking to Cate Lamb and we’re at World Water Week 2022 in Stockholm, and Cate is the Global Director for Water Security at CDP.

Cate Lamb:
Thank you. Thanks Jay.

Jen Quesnel:
Hi, I’m Jen. I’m one of the producers here at What About Water? I did not go to Sweden, but if you’ve been listening to the episode and you have questions about something you hear here on the show, send them to ideas@whataboutwater.org?
We record and produce this podcast on Treaty 6 territory in the homeland of the First Nations and Métis People.

What About Water? is a collaboration between the Water Slab and the Global Institute for Water Security at the University of Saskatchewan. This podcast is a production of Cascade Communications. Our audio engineer is Wayne Giesbrecht. Our producer is Erin Stephens. The crew at GIWS: Mark Ferguson. Shawn Ahmed, Fred Reiben, Andrea Rowe, and Jesse Witow. I’m Jen Quesnel. Thanks for listening.