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Water wells up corporate agenda to become issue for CFOs

Water sustainability | Water wells up corporate agenda to become issue for CFOs Ian Fraser

To a large extent, water has traditionally been taken for granted by the world's largest corporations. They have seen it as just another (usually free or cheap) abundant natural resource, the usage of which goes largely uncosted, unrecorded and unaccounted for.

That is all going to have to change. According to a McKinsey report, demand for water is projected to outstrip supply by up to 40% by 2030 and according to Nature, approximately 80% of the world’s population already lives in areas where fresh water supply is insecure.

The Carbon Disclosure Project, which has until now focused on pushing the reporting of carbon emissions and energy use up the corporate agenda, has decided to grapple with the challenges surrounding corporate interaction with H2O by launching a major new initiative - the CDP Water Disclosure Project.

Basically CDP aims to mobilize the power of institutional investors worldwide to galvanize corporates into behaving in a more environmentally sustainable manner. It has already achieved this with carbon, now it wants to achieve the same with water.

CDP Water Disclosure earlier this year mailed questionnaires to 302 leading global corporates, asking for information on their water use and other water-related business issues. The UK-based registered charity received responses from more than 150.

The findings, unveiled at Bloomberg's London offices today (Friday November 12) "provide an insight into the strategies deployed by many of the largest companies in the world in relation to water use and should help drive sustainability," said CDP.

Gregory Wade, global chief supply chain officer for brewers Molson Coors, a lead sponsor of the water disclosure project, said:

“As we move forward, companies must accept the responsibility for their own transparency and join in this effort to help advance what will hopefully emerge as a common water reporting standard benefiting all stakeholders.”

One of the main findings of the research was that, among companies that were able to identify whether they are exposed to water risk, 96% said water and water-related issues are already having a significant impact on their business and operations.

Two-fifths admitted that they're facing water-related problems - including their operations being disrupted by drought or flooding, declining water quality, and rising water prices.

Sixty-seven percent of respondents said responsibility for water and water-related matters is now at board level or executive committee level. The majority (89%) said they had specific water policies in place, while 60% had already set water-related performance targets.

Companies showing best practice in water management included Anglo American, Colgate-Palmolive, Ford, GE, PG&E and Taiwan Semiconductor Manufacturing.

Anne Kvam, global head of ownership strategies, Norges Bank Investment Management (NBIM), another lead sponsor of the program, said:

“Companies that fail to consider the impact of water scarcity and other water-related risks pose a financial risk to investments.”

The CDP Water Disclosure project intends to make the survey annual, so that companies' aqueous performance can be benchmarked from year-to-year.

The organization also said that its research (of both water and carbon emissions) is unique thanks to its global nature. Other surveys of corporate interactions with water and of carbon emissions tend to be confined to national borders.

Note: For background on CDP, established in 2000, here's a short video

Further reading on the sustainability of water and the impact of the environment on businesses:

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Tags: corporate social responsibility , environment , risk , sustainable development , transparency , water risk , water sustainability
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