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October 26, 2012
CDP Water Disclosure Issues 2012 Report on Corporate Water Use
    by Robert Kropp

For the first time, the initiative publishes a separate report focusing on water management by US companies, as the number of institutional investors requesting corporate disclosures on water increases to 470.


The number of institutional investors asking companies to report on water use and management through CDP Water Disclosure has increased by 33% over the past year, to 470 representing $50 trillion in assets under management.

Such an increase in investor concern is encouraging news in an era in which global water use is increasingly unsustainable and water quality is threatened by agricultural and industrial activities. However, the recently published CDP Global Water Report 2012 suggests that while corporate attention to water issues may be growing, it remains insufficient in too many cases.

For one thing, while investor interest in the subject has undergone a marked increase, 60% of Global 500 companies responded to CDP's request for information, the same percentage as last year. Considering that more than half of the companies that responded report having experienced water-related impacts in the past five years, and more than two-thirds consider water to be a substantial risk for their business, "The static response rate is disappointing," CDP observed.

In addition to acknowledging the business risk of water use, a substantial majority of companies report that water-related issues offer opportunities as well, and most believe that such opportunities will present within the next three to five years.

A significant bright spot reported by CDP is that 39% of respondents now require their key suppliers to report on water use, up from just 25% one year ago. Still, 29% of companies are "unable to state whether or not they are exposed to supply chain risks." While the percentage represents a decrease from a year ago, "there remains plenty of room for improvement," the report states.

Another area in which significant room for improvement remains is board oversight of water management policies, which remains essentially unchanged since last year. "Although there has been an increase in the proportion of companies able to provide key water accounting data," the report states, "there has been minimal change in the number of companies setting concrete goals and targets and the proportion of companies giving board-level oversight to their water-related policies, strategies or plans."

"Water is not receiving the boardroom attention that the risks and opportunities related to water imply it should be," the report observed.

For the first time, CDP Water has published a report based on disclosures by companies headquartered in the US. Forty-one percent of the 345 companies invited to respond did so, a respectable showing for a first-time effort; "given the weight of investor interest and the high profile of water-related issues in the country we would expect a significant increase in future years," the US report states.

Compared to the findings of the global report, US companies lag somewhat behind their peers headquartered elsewhere. Forty-five percent report detrimental water impacts, and 63% expect such impacts to occur in the neat future. Only 23% require key suppliers to report on water impacts, and 39% cannot state whether their supply chains are at risk from such impacts. Slightly more than half have established quantitative goals and targets for water management, and only 29% say the goals and targets are overseen by their boards.

 

 
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