February 05, 2014
Water risks to business are growing, but business is failing to disclose the risks fully or to take effective action to mitigate them, according to the annual Global Water Report, compiled from data supplied to the Carbon Disclosure Project by 185 Global 500 companies.
There has been a sharp rise in company reports of impacts from droughts and other water related problems but there is no corresponding rise in the number of companies who provide transparent water risk assessments to investors. Nor is there an increase in the number of companies that deal with water risk at board level.
As the world’s water crisis grows more acute, the impacts become more worrying. The report reveals a rising number of companies (53%, up from 38% last year) that have suffered negative impacts from everything from drought, flood, compliance costs, poor water quality and regulatory uncertainty in the last five years. As the report points out, 68% now see water as a substantial business risk and 71% see commercial opportunities in effective water stewardship.
Given these high numbers, it is puzzling to read that nearly one third of the businesses that reported are not able to state whether they are exposed to supply chain risk or not. (Those with supply chains in China might find the work that IPE has done to help companies identify water problems in their supply chains of some assistance. )
CDP concludes that business is still not doing enough either to share concerns with investors, or to address the potential threats. It is striking, given the widely accepted connections between water and energy, that companies in the energy sector remain the least transparent for the second year running, with only 44% responding to requests to water information.
Image by David Pedler