Water-Quality Risk Can Be Missed by Standard Measures
When investors assess water risk, they typically ask: Is there enough? Many may miss an important second question: Is the water good enough?
Roughly 12% of corporate facilities worldwide face significant water-quality risk without experiencing water scarcity.1 These facilities may not register as exposed under conventional water-risk frameworks, making them effectively invisible to investors relying on availability metrics alone.
The distinction matters because water availability and water quality are driven by different forces and don't reliably coincide geographically. Mapping corporate facilities globally using MSCI Biodiversity Risk Metrics, we found that the distribution of these two dimensions of risk differed significantly.
Diverging drivers of water risk
Availability is shaped by climate and precipitation, while quality is influenced by pollution, regulation, population density and industrial activity. In regions such as California, Central Europe and northern India, quality risks may stem from wildfire contamination, industrial PFAS pollution and arsenic leaching from over-extracted aquifers — none of which show up in a water-stress map.2
Sector exposure reveals gaps in standard metrics
Facilities engaged in food and beverage production and hospitality services account for 92% of those with quality-only exposure because their operations depend on water meeting specific safety and taste standards regardless of local supply levels. For example, a brewery located in a water-abundant region with weak industrial discharge rules may face operational risks despite not being exposed to droughts or water scarcity.
At the industry level, hotel and resort real-estate investment trusts (REITs) present a particularly stark case: Roughly 25% of companies in this industry show low availability risk but high quality risk — a profile that standard metrics may miss entirely. Investors who screen for water risk using availability data alone may be significantly underestimating exposure in consumer staples and in hotels, restaurants and leisure holdings.
How to use this chart: Select tiles in the matrix to filter the colored dots on the map for further information on assets and water-risk profile. Data as of March 2026. Facilities in each water-risk combination were isolated, excluding facilities with the activity of “other.” Facilities were then spatially clustered using DBSCAN (Density-Based Spatial Clustering of Applications with Noise), a geographic clustering algorithm that groups facilities based on proximity without requiring a predefined number of clusters. Clusters were defined as a minimum of three facilities within a 50 km radius. Source: MSCI Biodiversity Risk Metrics
Subscribe todayto have insights delivered to your inbox.
Compound Climate Hazards Pressure Beverage Giants
Beverage giants face mounting pressure from floods, heat and drought. Who may be most and least prepared to withstand escalating contamination and reputational threats?
Uncovering Nature Risks Through Geospatial Analysis
Nature loss is a rising risk to the global economy, disrupting supply chains, raising costs and slowing growth. Investors — such as asset managers, insurers and banks — who use geospatial analysis are better positioned to manage these location-specific risks.
Nature and Biodiversity
Identify and measure nature- and biodiversity-related risks and impacts.
1 Based on an analysis of over one million corporate facilities worldwide, using the World Wildlife Fund’s Biodiversity Risk Filter, integrated into MSCI GeoSpatial Asset Intelligence as of January 2026.
2 Per- and polyfluoroalkyl substances (PFAS) are widely used, long-lasting chemicals whose components break down very slowly over time, according to the U.S. Environmental Protection Agency.
The content of this page is for informational purposes only and is intended for institutional professionals with the analytical resources and tools necessary to interpret any performance information. Nothing herein is intended to recommend any product, tool or service. For all references to laws, rules or regulations, please note that the information is provided “as is” and does not constitute legal advice or any binding interpretation. Any approach to comply with regulatory or policy initiatives should be discussed with your own legal counsel and/or the relevant competent authority, as needed.