A tool has been invented to make it easier to incorporate water risk into corporate bond credit risk analysis. It allows investors to look at where companies operate, and apply a shadow water price in order to quantify the potential impact of water scarcity on the company's creditworthiness
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The tool was developed by a partnership between the Natural Capital Declaration, German development corporation Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), and the German Association for Environment and Sustainability in Financial Institutions (VfU). It was commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ).
Channels:Investment