J. Carl Ganter:

Thanks everybody. We still have a ways to go here. Just getting started. So I hope you’ve all had some dynamic conversations in your breakout groups. Lots of fun. I had a chance to surf them. Some really great ideas and provocative thinking. Really on the verge of global water challenges. So first what we’re going to do is, is we’re going to do, we’re gonna have our journalists facilitators in each breakout group give us a sense of what the topics were. What some of the highlights were give us a sense of report out. And then we’re going to come back to our three expert guests and have a conversation. You’ll have a chance to, in a larger group, ask questions, either on your screen. We may have the opportunity and time to take a few questions live as well. But we want to carry on this conversation, we have until the bottom of the hour. We have another thirty minutes to go. So if I can call on our journalists to give us an idea, a sense of the flow. What were some of the big ideas? So let’s start with Monika’s group and that was facilitated, Brett Walton, you were in Monika’s group. Correct?

Brett Walton: I was there Carl.

J. Carl Ganter: Excellent. Give us an idea. What happened?

Brett Walton: Yeah, we started out by talking about this constellation of the actors that are in the financial world. We have shareholders and companies and managers within the companies and investors and regulators. And how it seems to be that there’s a recognition among all these actors that water risk is a growing and necessary challenge to address. There’s a lot more to be done with gathering information at the company level and then within the supply chain level looking at how much revenue does it risk. What types of assets are at risk. And a lot more can be done by companies and them being funded by investors to do that. One of the encouraging things Monika, she’s developing, is green bond standards. So this will be away to ensure that projects have smaller chance of being stranded. Showing that there’s some climate ready, climate smart investments out there. Those standards were developed this year and the first project to go under the certification of the San Francisco public utilities commission on some of their water investments. That’s an encouraging movement going forward is that there are investors that are doing things to ensure that there are projects that are ready for the twenty first century.

J. Carl Ganter: Great thank you. That was Circle of Blue’s Brett Walton. Now in Michael Minelli’s group, that was facilitated by John Anderson. John, give us some of the top lines, some of the highlights, what you heard.

John Anderson: Thank you Carl. I think we started out with just a description of the concept of a policy performance fund. Which allows the government pay a lower premium on its debt if it is in fact meeting specific targets and the whole idea of a policy performance bond goes back away to when both the U.K. and Sweden had to issue inflation link bonds, just given the runaway inflation in those countries at the time. Michael made the point though and it follows on from his introductory remarks, that given how crucial and essential water is in any kind of development, that you could have policy performance bonds that could address more than just water. But could address things like education and housing within a particular region or municipality. There was also an interesting discussion about how the metrics that would have to apply to things are a little bit iffy at the moment. Particularly in the U.K. where the met office statistics have in fact, have been altered despite the fact that office didn’t indicate that. It’s a sad commentary to note that given other irregularities in the market around things like libore and the effects scandal, the idea of getting decent fixed metrics is pretty essential. There was also a discussion about the fact that these water restoration projects often have very long time spans and that is going to be an issue that investors are going to have to get their head around, given the fact that there can be political change and different regimes and different philosophies at play over a project that might take forty to fifty years. I think that the idea of these performance bonds actually coming into their own, we ended it by discussing the three ways that that could happen, one would be if a government found itself with it’s back to the wall in a panic mode, desperate to get it’s hands on funding. Having to go the market with something like a performance bond. We also talked about how aid agencies could be beneficiaries of these things coming into places where there was severe water shortages and targets set that they would have to meet again for the bonds performance. And finally the third way is that governments could on the other end of the spectrum here, who are in good shape could be issuing these bonds for the PR and marketing effect as a way to show the world that they have their environmental concerns in check. So I think that’s the wrap up of the meeting.
J. Carl Ganter: Great, thank you John. Again that was from Michael Minelli’s breakout group. And now Cate Lamb’s breakout group. Was facilitated by Circle of Blue senior editor Keith Schneider. Keith, tell us what happened.
Keith: Thanks, Carl. It was really lively conversation because Cate knows a ton about what’s happening around the world with lots of specifics. And she began by talking about Barrick Gold which abandoned a very expensive project in Peru I think in 2013, but I’m not specific on that. Five billion dollar project abandoned over water and then she talked about Anadarko not stranded assets, but what she called ground assets. Anadarko an oil and gas developer in Colorado had a field that was inundated in a flood that took it out of production and costs several hundred million dollars, which are interesting interesting example of what we’re talking about. We also talked about accountability and how governments and accountability plays here. She noted that the security and exchange commission in the United States has recording requirements for climate related risks and disclosure of climate related risks. She noted that the implementation of the standard of that standard has not been aggressive as it should be. We talked a lot about how to identify stranded assets related to water. She noted that the world resources institute’s aqueduct which has been a very successful tool, global tool to understand water risks and Bloomberg now has a water risks climate tool attached to its terminals. We talked about who and what companies are sort of gold standards in caring for water conservation and avoiding water related risks and she noted that Ford Motor Company is a gold standard company in this work, in this effort. I think those were the big ones and she also noted that board rooms. You know, board rooms are becoming much more aware of the significance of water related risks in their operating portfolios. And how much it could cost or how much they could gain from caring for water and being aware of water related risks and stranded assets. Really good conversation I think.
J. Carl Ganter: Great, thank you Keith. Really appreciate those report outs. Now I think we’re gonna bring, Charlie I think we’re gonna bring everybody back to group and would love to carry on this conversation. We’ll bring together Monika Freyman of Ceres and Michael Minelli talking about policy performance bonds and Cate Lamb of CDP. Would love to engage the three of you in conversation and also take more questions from our audience. Those questions I believe you can submit them on your screen and then we should have the capacity including a few of you perhaps by voice as well. Hearing the report outs, our special guests here, the experts. What did you hear from each other that you found particularly interesting? I know you run in the same packs, but we maybe come together a few times a year at conferences or the tops of mountains Cajamarca, Peru. Chime in. What did you hear? What would you like to ask each other?

Cate Lamb: We were looking in our session as well but how we might predict more stranded assets in the future, you know, in this distribution of, or the vision of growth and then the distribution of natural resources and how that might play out in the future with listening more to security. And we tied that into how, ultimately a future, or the successful transition to a low carbon economy is independent by a stable supply of good quality fresh water. But that narrative isn’t necessarily very strong in the climate community at the moment. And Monika I wondered if you had any thoughts there about we might increase the work that we’re doing or the voice within the climatesphere. It’s very easy to talk with our water colleagues and our water friends, but how might we expand the knowledge of water security and the importance of water security within that climate space? And perhaps maybe Michael can answer that as well? And of course anybody on the line.

Monika Freyman: I think what I find reassuring is that at more and more of these water events we are seeing climate at water events for example. So whereas before, at Water Week it was mostly a pure water crowd. One, we’re seeing a lot more finance at water events. But I also, series such as water quality and the links to climate change or really blinking cop and cop twenty two and having a water lens. Because as you mentioned Cate, climate risks are really water risks and visa versa. So, and the fact that water is a here and now, a very real and present risks that’s already being felt by climate is critical. So I think it is kind of more of an exchange of human beings at events is one element. But also, integrating in terms of planning and policy analysis, you know to make sure that the water analysis voice is in all that work as well.

J. Carl Ganter: Great. I had a question. If you were on the main stage say in Davos, Switzerland, water is the number one global risk by the world economic forum’s global risk report. I think Keith brought that up earlier. How do you make the case, because this has been a very siloed approach and we’re still trying to get to this idea of a nexus of water, food and energy. And now we’re starting to talk more about sustainable development goals, SDG’s. How do we work this whole finance conversation? We still have, it’s still Wall Street. I mean just one block off of Wall Street, quite literally in Manhattan is Water street. I continually see that wall. It’s getting smaller and smaller but it seems like it’s not shrinking fast enough to keep up with the big challenges at hand. Give me some guidance here, how do we break the rest of that wall quickly in a systems context?
Monika Freyman: I can just say two lines. One, you know, business doesn’t care if it’s a water risk or a climate risk or a food production risk. If it’s a financial risk it’s the all equalizer, so they’ll be very pragmatic about it and really try to work on those risks collectively. So I think a lot of those walls are instantly cleared the risk is really present and material. So that’s been of great benefit. And if I may jump in with a question of my own, I was very intrigued by the policy performance bonds and I feel like that is such a fascinating idea because in our own work with investors what surprised me most is how much out of the over three, four dozen investors that we’re speaking with regularly on water, how often regulatory risk comes up as a risk in terms of not just is regulation gonna change rapidly, but how much investors really fear poor water stewardship and governance in a region. And I think that’s really striking that there really seems to be a need from the investment community to have good water policies and stewardship. And that really is aligned with business versus what we’ve seen in the past is that you’d always have that assumption that business is against regulation and investors. But it’s so often, I’m seeing that that’s not the case at all which has been really fascinating.
Michael: If I could echo on that [crosstalk 00:52:30] that to me is interesting. We did a study about 2005and we did another one in 2010 on the investment analyst approach to water. These are quite substantial studies here based out of London but kind of looking at the international investment and analytical community. This is also the time, some of you probably recall, we had the enhanced analytics initiative going. One of the things we found was that the analytical community has really got this in, I was touring for example, doing a bit of analysis on a large paint manufacturer globally and one of the intriguing things there is, is they’re very conscious of what their water footprint is. They’re taking gross measures, they’ve achieved a lot in the last decade, pretty much have their water intake, which is pretty impressive given that paint is something like thirty to forty percent water anyway. So that’s great. Their investors and their analysts are asking about it all the time and that’s great too. But your point there is it’s at that infrastructure level where I meet government regulation and policy and that’s where we’re falling apart. And that’s not just a water issue. One can look at, we mentioned in our session, discount rates. That people have been using crazy discount rates so we wind up with lots of infrastructure, whether it’s highways or airports or railways. As you look globally, most governments have been taking some pretty, pretty short term decisions and water is a big long term decision. And I think bridging that gap between investors and companies and where is appropriate to have public infrastructure providing it. They need to know that public infrastructure will be delivered or they’ll have to do their own thing, which may include relocating
Cate Lame: If I may, I may pick you up on your point about how we break down the walls between Wall street and Water Street. There is quite an exciting movement at the moment going on across the range of different geographies around mandatory, non financial reporting. And that is being aimed at the companies themselves, but also financial institutions. It runs, for example, article one seven three is probably the most advanced piece of legislation out there at the moment. Which requires all french institutional investors to disclose how they are integrating climate related risk, including the depletion of natural resources into their investment practices. We see with the fast course of climate related financial disclosure, which is being led by Mark Carney the head of the Bank of England and Michael Bloomberg developing a methodology for again, voluntary, non financial reporting from the finance community as well as from many of the companies right across the G-20. And here closer to Stockholm the EU have implemented the non-financial reporting directive which will make it mandatory for companies of a set and size, I believe it’s over five hundred employees, again to include set in ESG metrics and factors into their annual reports. The role of reporting is something that of course excites us at CDP. It’s not necessarily everybody’s bag, but it’s a truly effective tool in driving systemic change. Because we can guarantee that once the institutional investors are requested to disclose this information, they will be holding the companies much more accountable for providing the information that they need to demonstrate better performance. It’s very exciting indeed and again and example of real systemic change that lies ahead.
J. Carl Ganter: Wow that’s exciting shifts there. We are getting some questions in here too from the group and one is, you know we’re talking on a large, powerful scale, we’re talking corporate board rooms. We’re talking Davos. We’re talking Wall Street. Is there anything practical that consumers can do? Or that the consumers are doing?
Maybe there’s some success stories right now we can share. Short of an intense grassroots movement, what can consumers do? How can they be part of this conversation?
Cate Lame: They can change their diet, for one. Agriculture accounts for the greatest consumption of water on the planet. It also contributes the greatest GHG emissions for example, in the U.K., particularly a real move towards vegan diets. I know that’s not for everybody and it can be very challenging, I’ve tried myself. I’ve tried [inaudible 00:56:59] and it’s unfortunately not a suitable substitute for real cheese in my opinion. But reducing the amount of meat products that we can consume everyday is relatively simple, it saves you money, it’s better for your health and that could have a significant implication for water resources management globally. And particularly when you consider just how much water is used in the production of beef for example.
Monika Freyman: I think another thing consumers can do as investors is when they look at their mutual fund statements or their little nest eggs, is to ask their financial advisor or the institution where they have their savings, if in that analysis of that mutual fund and the companies that are in your portfolio, is there water risk analysis taking place? I’m guessing somewhere in that institution they’re very well may be and it might be of interest. But I feel like every investor when you also are a consumer in terms of a financial product. So please do ask your investment advisors what kind of environmental and social and water risk that is taking place in those financial decisions when it comes to looking after your money.
J. Carl Ganter: So take it right to the teller rather than Wall Street. (laughs)[crosstalk 00:58:31]
Michael: I’m not going to disagree with these as very noble things that can be done and recognizing they’re the minority. Two things have always bothered me on the engage the consumer. If we the analytical community are still a bit in the dark here on some fundamentals. I’m always cautious, that doesn’t mean the idea of going vegan or something like that is insensible. I’d actually pull this back to two points. The first point is that if we really look at the cause of all of these things around this nexus of food, water, and energy, it’s actually population growth. I feel Joe Public would be better suited to be constantly thinking about what they’re doing to control population growth. That’s probably the biggest thing looking over a longer period. The second thing I always cautious of, particularly as we got into a lot of difficulty on this in the climate change debates of the early two thousands. When you start doing things, which came up in our group like life cycle analysis, you find that many of your suppositions are just wrong. So if you really really want to save the planet, use styrofoam cups and throw out your ceramic mugs. I know people don’t like to hear that, but that’s actually what the numbers say on life cycle analysis. Unless you believe you can use a mug, trying to remember the numbers, something like three thousand times before you throw it out. So drop one tray of mugs and that was several tens of thousands of styrofoam cups. Now, that’s not to be defeatist, but I do find for example that even in the water area a company that I know, I’m a big whiskey fan, they basically pull water out a foot from it dropping into the ocean anyway. But they have a terrible water footprint, yeah, well they do have a terrible water footprint but does it matter? The water was going to flow one foot farther into the salt anyway. I’m always a little careful about giving consumers overly simplistic do this, do that type things on this. We saw the same thing again in fisheries, when we setup the marine stewardship counsel nearly twenty years ago. We were giving out overly simplistic messages and people were running from fish to fish is sustainable, not sustainable and frankly getting themselves very confused. So, I’d like to get our houses in order analytically before we make too many recommendations to consumers.
J. Carl Ganter: Right. But perhaps getting them involved so they’re aware of maybe putting pressure for the disclosures.
Michael: Completely agree with that. Completely agree.
J.Carl Ganter: Part of that conversation and realizing there’s a risk for not disclosing. We have a question here in the audience about risks in the icebergs if I’m reading this right. That are underestimated or not yet considering. Let me hand the microphone, tell us briefly who you are and a question for our group here.
David Wilcox: Thanks Carl. David Wilcox, reach scale and we come from the social enterprise solving the world’s problems in view of the world but I think it’s really important to recognize that where we are today is dramatically different than where we were three years ago. And where we are going to be three years from now is going to be dramatically different than where we are today and I would say it’s nice to think about the risks being in an iceberg cause then the ones lower down don’t get seen or have to be dealt with. I’d say it’s more like a whack-a-mole and what’s happened in
the world is we’ve given whack-a-mole hammers to a whole new group of people and they’re hammering. And so you can see that here at the conference, where you show up in sessions that are talking about the connection between water and nutrition and wash and you find people asking, well how can we be spending money on sugar water? If we really care about water and nutrition and wash. That’s not a question that would have happened three years ago and it’s not a questions that’s currently being dealt with. Second example would be the whole nature of the SDG’s is that it educates the consumer on the connections with all these different problems. And as the consumer becomes the aware of those connections, they’re actually globally becoming a list of five things that they care about. You can interview anywhere in the world. That’s going to significantly change the level of risk of companies that are causing problems with those five things. And that’s going to be dramatically more visible two, three years from now than it is today. And then finally as things get more problematic, there’s going to be a question of competition over resources to scale solutions. And companies who don’t start focusing on scaling solutions are going to be asked why they should be able to use that many resources. I believe we’re going to get to a point where that’s going to become an issue for companies. Their reputation will be dependent on their ability to scale actual solutions. So, I’d love to hear from the experts how they would see that developing in the context of financial reporting and the context of investor reporting and in the context of moving resources to actual solutions.
Cate Lamb: Shall I take a stab at that? I’m sitting on the scaling. You’re absolutely right and that’s why CDP engages with the private sector as heavily as we do. They have that ability to scale solutions at a significant rate. Much more so than any government can. You mentioned the scale of Nestle and the workforce that they have. Importantly the number of suppliers that they buy from every year that’s an immense number of points that they have to change and motivate and prove performance and behavior, not to mention of course the consumers that they engage with. What we’re seeing at CDP is an increasing number of companies that are proactively engaging within their supply chains as Monika mentioned earlier. It’s not enough, we need to see more of them. But those that are leading the way are pushing the reporting requirements onto their suppliers and now holding them increasingly accountable through their procurement policies and procurement practices for delivering that change. So, Dell for example, now requires a selection of their suppliers to disclose water related data to them via CDP. And if they don’t, they are no longer a supplier to that company. We see increasing numbers of this activity happening in the carbon space and we imagine that the scalability will be achieved in the workspace as well.
Monika Freyman: I was just going to echo thank you for mentioning scale, I think that it doesn’t come up often enough in these discussions and around how we are going to be solving problems in general either around sustainability or water issues and from the corporate and investor perspective, I hope scale becomes a bigger part of focus area where companies really move from talking more about project by project but more about how the work they’re doing scales across the organization and is really embedded into every decision they’re making. What is the impact, not just in their operations and the water ship but the entire region? And you’re starting to see that with some of the leading companies that haven’t started mocking about and really trying to scratch their heads about these issues. They are constantly changing the scale and scope of how they try to tackle the problem. And I think there needs to be a lot more analysis and discussion of making sure that the solutions fit the scale of the problem and the need for the solution itself. So…
J. Carl Ganter: Michael did you want to add to that from your perspective? How do we really move the decimal point and accelerate the responses? Here at World Water Week we are, I’m sensing more of an urgency on the sanitation and on the water supply side. The fact that a billion people live in slums worldwide and that’s projected to be two billion coming up in the next few years. These are huge huge challenges. Where does scale come from in your perspective? You’ve lived this, you’ve seen this.
Michael: I’d agree with many of the comments that were made earlier. It’s a question that’s not asked often enough as it’s for good. I think it’s a very good point that we have to figure out how to get there. That’s kind of why I think these policy performance bonds are being sought. Imagine the government of India committing to eighty-five percent sanitation of a particular scale. Huge amounts of other related investment would flow in based on that as well as giving any government the money to get the job done. That’s why I think we’re proposing this because the only way we’re going to see these kind of large elements to scale is large elements of credible commitment by governments which were lacking. Many of these very noble examples are ultimately, extremely local and I too am as frustrated as anybody else because the urgency is there. By the way, I don’t want to sound too good, I completely agree with the point that keeping the consumer aware of the urgency of the issue is important, maybe not going quite as far as just telling them too many specifics, but we are learning.
J. Carl Ganter: Well, learning is what we’ve done here today and I hope we’re taking this more, we always say this, taking this to action, but that’s really part of our role in this space as journalists, as story tellers. It’s just the beginning of the story, we always say that the cub reporter gets the assignment. Go cover water! And they run out the door and say “where do I start?” Just start, that’s the whole point. This is just the beginning to the story and I think one of the biggest stories that we in the journalism profession and at Circle of Blue can be covering and that’s the whole story of stranded assets and the whole story of huge capital flows that are shifting and whether we characterize them as icebergs or little flags on top of icebergs. The bottom line is huge amounts of data, the ability to visualize and respond almost, not real time, but unprecedented amount of data and new tools coming forward. Again, that’s what we’re trying to do at Circle of Blue using world leading journalists and reporters. We have a very exciting data initiative that we’ll be talking a lot more about tapping into live data at scales never done before. Excited to be working with companies like click and Columbia University and Twitter and other pieces like that. Bringing in unusual suspects into the space and I think that’s what this whole conversation here, talking about stranded assets is doing under pressure so to speak. I really have to thank our guests for sharing their time and expertise and this H2O Catalyst event live from Stockholm World Water Week here in Stockholm. Monika Freyman and Michael Minelli and Cate Lamb, thank you so much. And our journalist facilitator Brett Walton and John Anderson and of course Keith Schneider who is on the front lines of this story for us and keep following that work. We’ve only just scratched the surface and we’ll be doing a lot more in the U.S. and globally on this story. Here in Stockholm we’ve had help from Circle of Blue’s Cody Pope and Jennifer Muller-Gallan, back in the back here and to SIWI our host and technical support here in Stockholm with wires running everywhere. And a huge thank you to the Circle of Blue team behind the scenes, sleepless in putting together these pieces as well as all the other fun work that we’re publishing on Circle of Blue.org and that’s Laura Herd. Of course, Matt Welch, Connor Bebb, Codi Kozacek, Brett Walton who you already heard on the call. And the rest of our team and crew of interns and everyone else that we applaud for supporting us in this endeavor and journey and adventure. Lastly to Maestro Conference Charlie and Josh and Adam and Aubrey and the whole team for the technology that makes this possible. It’s a very cool process. We hope you’ll follow the results of the Catalyst series online at Circle of Blue.org and we have our previous events looking at the U.S. national infrastructure challenges at H2O catalyst.org and so from all of us at Circle of Blue and here in Stockholm at World Water Week, thanks so much.