Sustainability Now The Physical Risks of Reshoring
May 2, 2025
Katie Towey, a hydrometeorological hazard expert at MSCI ESG Research, highlights the physical risks of reshoring U.S. manufacturing. She discusses how water scarcity and extreme heat can impact semiconductor facilities, particularly in California and Arizona. The conversation uncovers the challenges companies face in choosing locations while grappling with climate-driven hazards. Towey also touches on the broader implications of extreme weather on supply chains, revealing the fragility of manufacturing in disaster-prone areas.
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Water Scarcity Threatens Semiconductors
- Semiconductor manufacturing is highly water-intensive and often located in water-scarce U.S. areas like California and New Jersey.
- Expanding in these regions poses significant risks due to frequent water shortages impacting operations.
Assess Water Risks Before Investing
- Investors should evaluate if companies build water-dependent facilities in areas facing water scarcity.
- Consider water availability alongside labor and infrastructure to avoid costly resource conflicts.
Brewery Build Canceled Over Water
- Constellation tried to build a drought-threatened brewery in Mexicali but faced local water diversion conflicts.
- The backlash forced a $6.5 million write-down and canceled expansion, illustrating water risk costs.