With the state of the economy on everyone’s mind, it makes sense that lately we’ve been talking a lot about the financial side of water resource management. The trend continues this week with the announcement that the Carbon Disclosure Project (CDP) has released the preliminary results of its first annual Water Disclosure program survey. The CDP’s water use questionnaire—sent out to over 300 of the world’s largest corporations—was designed to record the possible impacts and constraints experienced by businesses as a result of their water use and access to resources. In the past, the CDP has focused on compiling the “largest database of primary corporate climate change information in the world,” periodically releasing information on carbon footprints and related data.
Initially, the CDP disclosure questionnaire was sent to 302 companies, requesting that they fill out the form and supply information on their water use and any other water-related business issues. Ultimately, 122 of the companies responded publicly to the CDP’s inquiry, and another 25 responded on a “purely voluntary basis”—resulting in about a 50% response rate.
The disclosure program came about as a result of a request by institutional investors—which the CDP estimates represent around $16 trillion in assets—as a way to “increase transparency and accountability on water scarcity and other water-related issues, and to inform the global market place on investment risks and commercial opportunities.” The hope is not only that the CDP’s Water Disclosure program will supply investors with an enhanced perspective on how large companies deal with water resource management issues, but that the raw numbers will drive corporate sustainability efforts.
The report, which was prepared by Environmental Resource Management (ERM), includes the following findings:
* Water is already impacting business operations with “96% of responding companies able to identify whether or not they are exposed to water risk, and more than half of those reporting risks classifying them as current or near-term (1–5 years).”
* 39% of companies are already experiencing detrimental impacts relating to water including “disruption to operations from drought or flooding, declining water quality necessitating costly on-site pre-treatment, and increases in water prices, as well as fines and litigation relating to pollution incidents.”
* Water security is already high on the corporate agenda with “67% reporting responsibility for water-related issues at the board or executive committee level.”
* And finally, 89% of the responding companies have “already developed specific water policies, strategies, and plans, and 60% have set water-related performance targets.”
Other CDP Water Disclosure Report Key Findings:
* Business engagement on water issues differs widely across different industry sectors: 100% of companies in the chemicals sector responded compared with just 29% in the oil & gas, and construction, infrastructure & real estate sectors.
* Responses were received from companies in a total of 25 countries, with the most responses coming from the USA (59, 57% responding), the UK (14, 64% responding), and Japan (13, 45% responding). The highest response rates were from South Africa (100%), Germany (83%), and Switzerland (71%).
* A high number of corporations (62%) are identifying a wide range of water-related business opportunities in areas such as water management, water efficiency and reduction, and wastewater treatment.
* Just 53% of companies are able to identify whether they are exposed to water risks in their supply chains, as opposed to the high levels of awareness (96%) of water risks in their own operations.
* Sectors reporting the greatest exposure to water risks include food, beverage & tobacco, and metals & mining, with chemicals and technology & communications the least exposed. Physical risks to direct operations from drought and flooding were most frequently cited, but companies also recognize risks from changing regulations and reputational damage.
* Companies exhibiting best practice in water management include Anglo American, Colgate-Palmolive, Ford, GE, PG&E, and Taiwan Semiconductor Manufacturing.
So what do you think? Will giving investors, companies, governments, and other interested stakeholders information on companies’ water usage, water-related risks, and investment opportunities impact water resource management? Can aggregated data about the inherent water use associated with corporate operations and supply chains, inspire individual businesses to enhance and improve their water management plans? And is there any chance that the CDP’s corporate water use database could be used to develop standards and tools to help measure and manage corporate water use in a way that will make those companies more efficient?
For more on the CDP Water Disclosure program, go to: www.cdproject.net/water-disclosure.