Water stress hitting companies’ profits, finds new report

Nearly half of companies surveyed in a new report said that water-related challenges are not hitting the bottom line of their businesses...

World Ripples 1237378

World Ripples 1237378

Nearly half of companies surveyed in a new report said that water-related challenges are not hitting the bottom line of their businesses.

However, while the knock-on effect of water scarcity is being felt by some companies, others are addressing the threat head on.

A report by global non-profit group CDP that ranked companies on corporate water stewardship found that some companies are beginning to move ahead of the pack in addressing water concerns.

CDP said that eight businesses from four sectors have joined its “A List” for their efforts to improve water security.

This included Asahi Group Holdings, Colgate Palmolive, Ford Motor Company and Toyota Motor Corporation.

The findings come in a year whentheWorld Economic Forum has ranked global water crises – including drought, increased risk of flooding and deteriorating water quality – as the greatest threat facing the planet over the next decade in terms of impact.

For the report, this year 617 institutional investors asked 1,073 of the world’s largest publicly listed companies across industry sectors with high water vulnerability or impacts to disclose how they are adapting and responding to worsening water security.

The 405 company responses to this request – over twice the number of companies analyzed in 2014 – were used for the report.

Despite ongoing water crises such as droughts in California and parts of Brazil, more than half (53%) of companies are failing to conduct a comprehensive risk assessment, according to CDP.

Oil and gas companies in particular are not meeting investor demands for transparency and action, the report found. Just under a quarter (22%) of the world’s largest publicly listed energy companies responded to CDP’s annual request from investors to account for their water management strategies in 2015, less than the average disclosure rate of 38% this year.

This lack of transparency is concerning given over two-thirds of oil and gas companies (65%) disclosing to investors via CDP say their business is vulnerable to substantive water risks.

Furthermore, the bottom line has already been hit for almost half (43%) of these companies due to water-related challenges in the past year – among the highest of the eight sectors featured in CDP’s report and much higher than the cross-sector average of 27%.

Cate Lamb, head of water at CDP,said:“Just as oil was to the 20th century, water is fast becoming the defining resource of the 21st century. Unfortunately however, unlike oil, there is no replacement for water.”

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