Water-hungry food companies ignoring supply chain risks, report finds

Just six of the world's largest food companies have set sustainable water-sourcing targets for the majority of their agricultural inputs, as a new report reveals that water risks in the supply chain are still largely ignored.

Ceres published its latest Feeding Ourselves Thirsty report today (11 September), which evaluates 42 of the largest food companies on water risks across packaged foods, beverages, agricultural products and meat. The latest report found that while the number of companies that were assessing water risks had increased by 30% since 2015, just six has set sourcing goals across key areas of the business.

The report noted that Coca-Cola, General Mills, Kellogg, Nestlé, PepsiCo and Unilever were the only companies that had set these goals, with 50% of the evaluated firms were yet to show evidence that their boards of directors were “exercising oversight” on water-related issues.

Recent MSCI analysis of food companies in its All Country World Index (ACWI) found that $459bn in revenue is at risk from water scarcity for irrigation and animal consumption. Ceres also estimates that by 2050, water demands will increase by 55% and food demand by 60%.

Climate change looks set to impact how companies interact with water supplies, with hotter temperatures set to create the biggest risk to the $5trn industry’s bottom line. Fortunately, 85% of the companies scored in the report cite water as a material risk in financial filings. Although this represents a 30% increase on 2015, supply chain risks remain under-explored with just over half of the companies conducting regular assessments of their supply chains.

Kraft-Heinz and Monster Beverage finished bottom of the rankings in their respective sectors, with the latter scoring 0 out of 100, Coca-Cola, Unilever, Nestlé and Diageo were amongst the highest-scoring brands.

The report also highlighted that the number of companies linking executive compensation to water savings had increased by 150%, although only 12 companies currently use water as a criteria for executive pay.

Anglian for change

It’s not just businesses that are attempting to reduce water usage. Anglian Water has teamed with brand purpose consultancy Given London to help Newmarket residents reduce annual water usage by 30%.

Given London has carried out insight work with residents to gain an understanding of behaviours and habits, and will launch a behaviour change drive and test new technologies from Anglian Water.

“We are really excited to deliver positive, real change for Anglian Water around consumer water usage,” Given London’s managing partner Ben Hayman said.

“It is an important challenge and key to its success will be better connecting consumers’ water usage to both their household bills and the environment. Our approach is insight based, as we work closely with Anglian Water and the local community, to deliver results which can then be replicated at scale across the UK.”

Refill scheme

While it is important for businesses to track water use, another key environmental issue is emerging regarding the use of plastic bottles. The UK use 7.7bn single-use plastic bottles every year for water and drinks. An estimated 800 plastic bottles a minute are either ending up in landfill or as litter in waterways and new campaigns are attempting to reverse this trend.

Once such campaign is Refill, which aims to reduce the use of plastic bottles by getting businesses to offer free tap water refills. Last week, Banbury and Bicester became the tenth and eleventh towns in England to sign up to the scheme.

Around 20 local businesses have joined the initiative across the towns. Participating businesses register with an app and place a sticker in their window to alert passers-by that they are a Refill site. People using the scheme do not have to be customers of that business.

Matt Mace

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