2Sustain

Water scarcity risks are growing in many parts of the world, and yet a new study, by the Ceres investor coalition, the financial services firm UBS and financial data provider Bloomberg, found that most companies in water-intensive industries have weak management and disclosure of water-related risks and opportunities.

The study, “Murky Waters? Corporate Reporting on Water Risk,” used a scoring scale of 0 to 100 to rank 100 publicly-traded companies in eight key sectors exposed to water-related risks.

Eighty of the 100 companies scored fewer than 30 points. The three highest scoring companies — UK beverage company Diageo (43 points), Swiss mining company Xstrata (42 points) and U.S. electric power company Pinnacle West (owner of Arizona Public Services) (38 points) –couldn’t even reach the 50-point threshold.

And, none of the 100 companies are providing comprehensive water data on their supply chains –an especially glaring omission given that the vast majority of many corporations’ water footprint is in the supply chain.

“Most companies provide basic disclosure on overall water use and water scarcity concerns, but their focus and attention so far is not nearly at the level needed given the enormity of this growing global challenge,” says Mindy S. Lubber, president of Ceres, which published the report, Murky Waters: Corporate Reporting on Water Risk. “Our global economy runs on water and in many parts of the world this finite resource is under threat. Companies must do more to disclose their potential exposure from this issue and their strategies for responding.”

The report also revealed that:

• The mining sector scored highest overall, followed by the beverage industry. Companies in the homebuilding sector had the lowest overall scores.

• Only 21 companies disclose targets to reduce water use, and even fewer – just 15 companies – had goals to reduce wastewater discharge.

• Only 17 companies report local-level water data, and only a handful provide the information in the context of operations in water stressed regions.

Here in California, water shortages have devastated the state’s agricultural industry. Because of the drought, more than 21,000 jobs –and more than $1 billion in revenues –have been lost.  As a resident of California, I’m constantly reminded of water scarcity issues . . . and you need to start thinking about them with regard to your business, too.

Check out the full 98-page report for more details, but here are a few fundamental recommendations from Ceres about how you can start better managing your company’s water footprint:

• Include material water risk factors and performance data in their financial filings.

• Provide water performance data broken down to the facility level for operations in water-stressed regions.

• Outline actions and policies for assessing and managing water risks, including quantified targets for reducing wastewater and water use.

• Disclose how they are collaborating with stakeholders and suppliers on water risks, including setting performance goals for key supply chains.

• Outline specific strategies for developing water-related products with strong market potential in a water-constrained world.