Hospitality sector ignoring water risks

Hotel chains, fast food companies and foodservice firms are failing to map the scale of the water risks they face. Many hospitality companies are also struggling to integrate water issues into their business governance and strategy, which will concern investors.

The findings are part of a new report, Treading Water, published by CDP, an environmental disclosure platform that works with investors with assets of $96 trillion (£73 trillion).

CDP noted that businesses in the hospitality sector have water intensive supply chains – mainly through the food and drink they sell. Consumption can also be high, especially in hotels where water can account for 10% of utility bills. “These companies can drive change and reduce water impacts through working collaboratively with their value chain – suppliers and consumers alike,” the authors noted.

However, in a detailed assessment of 34 publicly listed hospitality businesses, CDP found the sector lagging behind others in many areas. A major concern was the lack of risk assessment going on – even amongst businesses that have a presence in areas exposed to “substantive water risk”. Only one hospitality company – the US firm Las Vegas Sands Corporation – made CDP’s A-list.

The food, beverage and agriculture (FBA) sector achieved higher scores than hospitality, but some major global brands – including Pernod Ricard – still don’t disclose water information to their investors. AB InBev was praised for including water-related goals in executive targets and financial rewards.

Heineken this month announced a series of new water targets, including a commitment to reduce water usage to an average of 2.8 hectolitres of water per hectolitre of beer (from 3.2 hl/hl) for breweries in water stressed areas and to 3.2 hectolitres of water per hectolitre of beer (from 3.5 hl/hl) on average for all its breweries worldwide.

The FBA sector leads the way on setting of targets and goals as well as on value chain engagement. However, the sector was found to be extracting more and more water.

CDP CEO Paul Simpson said corporate action is not reaching the pace and scale needed to truly address water insecurity. “Our analysis shows that even as companies report greater risks year on year, freshwater withdrawals are increasing as they expand their production,” he said.

“As water crises worsen, these high impact companies are increasingly exposed to risks that could threaten their reputations, revenue and financial stability,” the report noted.

The full CDP report is available HERE 

Download the Footprint Intelligence Why Care About Water Report in association with Meiko HERE

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