by Shane Henson — November 21, 2011—A recently released report by the Carbon Disclosure Project (CDP), Water Disclosure Global Report 2011, finds that while companies understand that water management is key to the continued success of their business, it is generally not given the same attention as climate change.
The report found that 57% of the 190 publicly listed organizations that participated in the survey report board-level oversight of water policies, strategies or plans. By comparison, a report released by CDP in September 2011 showed that 94% of Global 500 companies report board-level oversight of climate change, suggesting that corporate understanding of water as a business concern trails that of climate change. According to the CDP, this is surprising, given that the majority of reported water-related risks and opportunities are recognized as near term.
The report is based on a questionnaire sent to 315 companies on the Global 500 index that are identified as operating in the most water-stressed locations or industry sectors. This year, 190 (60%) of these companies responded—a 10% increase from the previous year—showing improved transparency on water management. CDP Water Disclosure collects data annually on water use, strategies, and risks and opportunities from companies on behalf of 354 investors representing US$43 trillion in assets.
According to the CDP, over half (59%) of companies surveyed report exposure to water-related risks such as flooding, scarcity and reputational damage. The majority of these risks are near term: 64% of risks in direct operations and 66% of risks in the supply chain are identified as occurring between now and 2016. Illustrating the urgency of water risk, more than one-third of responding companies (38% have already experienced water-related business impacts, such as disruption to operations from severe weather events (e.g., flooding) and water shortages.
Underscoring the opportunities associated with effective water management, 63% of respondents say that water presents commercial opportunities, most of which (79%) are near term. The most commonly identified opportunities are associated with cost reductions from increased water efficiency, revenue from new water-related products or services, and improved brand value.
Responding to the report, Paul Simpson, chief executive officer at CDP 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.”
