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Water-related risks in equities - Franklin Templeton Investments

Pricing in risk, chapter 2.

Posted on Nov 16, 2020

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... Water risk impacts investors’ equity holdings in two simple ways: decreased revenues and increased costs. These risks manifest operationally, potentially impacting or preventing a company’s day-to-day operations, and through the company’s understanding and management of risk via its water and wastewater management plans. Risk in these plans surfaces through supply and demand needs, proper treatment and storage of wastewater, and the company’s interactions with local stakeholders and communities. If not properly managed, these risks can lead to regulatory and reputational issues in addition to a negative impact on water sources required for operations. And, if not properly understood and priced, these risks can negatively impact clients’ assets.

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