Companies failing to appreciate water risks

18th November 2011


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IEMA

Some of the world's largest firms are risking operational and supply-chain disruption by failing to manage flood and water shortage risks properly, warns the Carbon Disclosure Project (CDP).

According to the CDP’s latest research, many FTSE 500 businesses are not taking the same strategic, board-level approach to managing access to water and flood risks, as they are to the challenges of climate change, despite threats in the short term.

Of the 190 FTSE 500 companies that participated in CDP’s second global water disclosure report, 59% revealed they considered themselves to be at risk from water shortages and floods while 38% said their business had already them. Furthermore, the majority of respondents confirmed they considered potential threats as likely to face them in the next five years.

Despite identifying these risks, only 57% confirmed that water strategies and plans had board-level oversight, compared 94% of the firms responding to a CDP survey earlier this year confirming that their board oversees climate change strategy.

“Water is a precious resource and the importance of protecting local supplies should not be underestimated at a management or board level,” said Michael Glade, director of water resources and real estate of global brewery Molson Coors.

“Companies play a critical role in working with local water interests to ensure a sustainable watershed. It is only through transparent disclosure by all water users and knowledge sharing that companies can move towards a more secure water future.”

Nick Main, leader global sustainability at Deloitte subsidiary DTTL, agreed: “There is a need for broader action by companies to address water stewardship both at the enterprise and product levels. Development of standard measures and performance benchmarks around water use are critical steps toward achieving that broader action.”

While more firms responded to the CDP’s water survey this year than last, Paul Simpson, CDP CEO, warned that businesses have to start paying more attention to the threats and opportunities posed by access to water.

“We need to see more companies understand that water is a critical issue, requiring greater board-level attention than it currently receives,” he said. “Those corporations that navigate the challenges effectively will be able to profit from the significant opportunities that result from a robust water strategy.”

According to the survey results, 63% of organisations were also aware of the benefits offered by efficient water management, with cost savings, improved brand value and revenue from new products and services most commonly sited as potential opportunities for their firms.

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