Businesses at high risk says CDP Water Disclosure report

The new Water Disclosure global report from the Carbon Disclosure Project (CDP), released this morning, highlights just how far behind climate change the issue of water is on the corporate agenda, despite high levels of near-term risk posed by water scarcity.

The report is based on responses from companies in the Global 500 index that have been identified as operating in the most water-stressed locations or industry sectors.

Of the 190 companies that responded to the survey, 57% have boards that oversee water-related policies, compared with 94% with boards that have oversight of climate change policy. However, 93% of companies said that a water policy, strategy or plan was in place, though many of these came under the general environmental or sustainability remit, rather than water-specific policies.

This is despite the fact that, 59% of companies reported exposure to water-related risks, in one or all of three categories: flooding, scarcity and reputational damage. And the majority of those risks (64% in direct operations and 66% within the supply chain) were identified as occurring between now and 2016.

In fact, more than a third of those responding to the survey (38%) said they had already experienced water-related impacts on their business within the past five years, such as water shortages or operational disruption due to severe weather events such as flooding.

Energy companies came bottom of the table when it came to board-level oversight of water policies at just 36% and the sector with the lowest percentage of respondents with concrete targets or goals in place. Energy firms were also the business type with the lowest response rate to the survey, despite having the third highest exposure to near-term water-related risk behind Utilities and Materials businesses.

However, it seems that despite the disparity between water and climate change in terms of priority on the corporate agenda, the relationship between water end energy is more widely understood, as 72% of respondents reported linkages or trade-offs between water and carbon emissions. And 63% had identified commercial opportunities such as cost reductions, revenue from new water-related products or services and improved brand value.

CDP ceo Paul Simpson said: “Some of the largest multinational companies have experienced the detrimental effects that water can have on their bottom line. The findings released today illustrate the very near-term nature of water-related impacts. We need to see more companies understand that water is a critical issue, requiring greater board-level attention than it currently receives. Those corporations that navigate the challenges effectively will be able to profit from the significant opportunities that result from a robust water strategy.”

Will Parsons

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