Threefold rise in number of firms with ‘A-rated’ water practices

Latest report from investor-backed environmental data body CDP

The number of companies disclosing and managing water risks according to best practice has nearly tripled in the past year – from 25 to 73 – according to the latest report from the CDP.

The NGO has released its ‘A List’ for water management – naming the top companies across a range of sectors. The 73 that made the grade this year include household names such as Ford, Burberry, Sony, Kelloggs, Fiat, L’Oreal, Coca-Cola and Acciona.

The report was backed by 639 institution investors, representing $69trn of assets under management, which all sign CDP’s request for water-related information. For a full list, see here. The water programme has been garnering increased investor attention since it launched in 2009, when it had just 137 signatories.

“Water for industry is rarely priced to reflect scarcity today,” said Carine Smith Ihenacho, Global Head of Ownership Strategies at Norges Bank Investment Management – a backer of the water programme and the author of an introductory commentary to the report.

“However, we do not expect such implicit subsidies to be sustainable longer term.”Observing the growing number of firms reporting to CDP on water, Smith Ihenacho said NBIM was “hoping to see more firms disclose targets and metrics addressing water management, rendering disclosure more meaningful for us as shareholders.”

CDP contacted 4,653 companies to request water disclosure, of which 2,025 responded. The authors then selected “the most significant” firms, which resulted in a sample size of 742. The proportion of companies disclosing was highest in South Africa, Germany and the United Kingdom. The highest rates of disclosure by sector were Information Technology, Materials, Health Care and Consumer Staples.

The top five risks identified by participating companies were higher operating costs, supply chain disruption, water supply disruption, constraint to growth and brand damage.

The report finds that 70% of participants – 520 companies – have board-level oversight of water issues. “By providing board members with the information and tools to plan for a transition to a water-secure world and by publicly monitoring their progress, water stewardship can become part of companies’ modus operandi,” the authors conclude.