COCA-COLA, BUNGE and Kellogg’s are just some of the major food and drink players moving to strategically address water related risks and opportunities through CDP, the global disclosure system through which a growing number of investors is calling on companies for environmental accountability.
These businesses were among the 174 listed corporations who responded last year to a request from 573 investors with US$60 trillion (£38.5 trillion) in assets to report vital water information through CDP. Over two thirds (68%) of them said water-related risks could generate a substantive change in their business. In fact, nearly a quarter (22%) believe that issues around water could limit their growth. Of these, one-third expected that constraint to be felt within the year.
Increasing competition for natural resources, unpredictable weather extremes and mounting energy demands place pressure on freshwater systems. It’s no wonder, then, that smart companies are acting now. Nestlé assigned approximately US$43m (£27.5m) for water efficiency and wastewater treatment facilities at its plants last year. Numerous organisations cite reduced costs from improved water efficiency: Diageo says it has reduced the volume of its water withdrawals by nearly one million cubic meters in the space of a year, with estimated cost savings of some US$3.2m (£2m).
Together with our lead water-scoring partner, South Pole Group, CDP will this year introduce the first evaluation and ranking of corporate water management efforts. On behalf of 617 investors representing US$63 trillion (£40.4 trillion), 62 companies from the agriculture, food and drink sectors, including Archer Daniels Midland, McDonald’s and Tesco, have been invited to have their disclosures scored.
The questions in the disclosure process guide companies to comprehensively assess the direct and indirect impacts that their business has on water resources. Taking that one step further by introducing credible scoring will catalyse further action. It also illuminates where companies can improve their performance and the quality of the information they report. Participants benefit from peer benchmarking and sharing of best practice, driving annual improvements.
These scores, which CDP will announce publicly, will drive healthy competition. They will also raise the visibility of water as a strategic issue within companies and increase transparency on the efforts they are making to manage water more effectively. Furthermore, they will be used to inform business strategies, build supply chain resilience and secure competitive advantage. We hope that keeping score on companies and water will reduce the detrimental impacts that the commercial world has on water resources, ensuring a better future for all.
Cate Lamb is head of the Carbon Disclosure Project’s water programme.