Businesses anticipate that water related risks will cost them £298bn a year in future impacts, a study has found.

The estimate the cost of water threats, such as through climate change related flooding and drought, includes £33bn in supply chain risks.

This comes on top of £1bn in current financial impacts from water-related disruption facing firms.

But one in three businesses are not considering such threats in their risk assessments, found the research from environmental disclosures platform CDP based on water related data from more than 6,500 companies.

Researchers found that many of the risks “occur deep withing global supply chains” in “water stressed regions where water governance is fragmented or under-resourced”.

CDP chief executive Sherry Madera wans that threats from water risks affect a range of sectors, including artificial intelligence and advanced manufacturing “with direct implications for growth and competitiveness”.

She said: “As companies make decisions about investment, sourcing and expansion; there is a fundamental constraint that cannot be solved simply by moving a factory. You can relocate production; but you cannot relocate a river basin.

“Water, therefore, should not be treated simply as an environmental issue, but as essential economic input.

“Companies and countries that understand their dependencies and invest in resilience will increasingly have an advantage in attracting capital, maintaining production and growing in a more resource-constrained world.”

CDP head of water Joe Ray added: Water risk is deeply material to many sectors but is not yet fully priced into capital markets.

“That means water resilience will increasingly become a competitive differentiator for firms in water-dependent industries. Companies that act to mitigate their exposure and can signal this to the markets will be better positioned as water stress intensifies."

---