Investors are overlooking the risk of water scarcity and the impact it could have on their portfolios in the coming decade, according to investment management firm BlackRock.
Water demand exceeding supply in parts of the world is becoming a larger risk to investors, a headwind to supply chains and a cause of geopolitical tension, said to the firm's research arm, the BlackRock Investment Institute.
Shortages of water also play into other climate-related risks, such as hurricanes, wildfires and flooding, the firm said.
Companies that are resilient to water stress may fetch a premium as the importance of access to water becomes impossible to ignore, said BlackRock.