Water risk a growing concern for companies and investors

5th November 2014


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  • Adaptation

Author

Stephanie Woods

The world's largest companies are failing to improve disclosure on water issues, despite more than two thirds saying they may face commercial damage from water risks.

The Carbon Disclosure Project (CDP) surveyed 174 FTSE Global 500 companies as part of its annual water report on water risk.

68% of these companies reported that they are at risk from water scarcity, or problems with accessibility or poor quality, which will affect their economic output and outlook.

The number of investors pushing for corporate accountability on water and related information has risen from 137 investors with £16 trillion in assets in 2010, to 573 investors with £60 trillion in assets in 2014, the report says. Over 60% of survey respondents said that “ultimate responsibility” for water issues lies at board level, which CDP cites as evidence of a sign of shifting corporate perspectives.

“Water increasingly moves from an operational issue into the boardroom,” the report states.

But despite pressure from investors, and their closer scrutiny on the actions and ethics of corporations, 42% of companies from the Global 500 failed to divulge information they were asked to reveal.

The rate of disclosure from Global 500 companies has been “pretty stagnant” since the CDP began its programme in 2010, a spokesperson said. In 2010, 50% of companies responded. This rose to 60% in 2011, and 68% this year, CDP figures show.

However, outside the Global 500, the disclosure rate has improved. The proportion of companies disclosing information on water through the CDP’s water and supply chain programme rose by 79% compared with 2013. “I think it’s strange that Global 500 companies aren’t matching this growing rate of disclosure,” she said.

If water scarcity prevails, companies may not be able to provide their core products and services, said Constantina Bichta of Boston Common Asset Management, and could find themselves in conflict with communities over access to water issues, putting their licence to operate at risk.

“As investors in these companies, this is something we are deeply concerned about,” she said.


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