sri-advisor.com
where checking accounts rebuild communities
Back to homepageInstitutional ReportsSRI Financial Professionals DirectoryToolsNewsSRI Performance and TrendsAbout Us   
News


August 24, 2015
Major Food and Beverage Companies Fail to Manage Water Risks
    by Robert Kropp

As water scarcity becomes a major issue for sustainable development, a coalition of investors organized by Ceres calls for better water management and disclosure by 15 major food and beverage corporations.


Fifteen companies in the food and beverage industry sector—all of which have been identified as poor performers relating to water management—have received letters from a coalition of 60 institutional investors representing $2.6 trillion in assets under management, urgently requesting improved water risk management and disclosure practices.

In the letters, the investors—organized by
Ceres, and supported by the Interfaith Center on Corporate Responsibility (ICCR) and the United Nations' Principles for Responsible Investment (PRI)—stated that the targeted companies “may be exposed to a range of physical, regulatory, reputational and community impact risks, which could substantively jeopardize the sector’s short and long--‐term ability to operate. These threats can, and already are having profound near--‐term business impacts on food and beverage companies that are disrupting operations and supply chains, increasing capital expenditures and operating costs, and constraining revenue growth.”

The recipients of the investor letters include Archer Daniels Midland, Dean Foods, Dr Pepper, Del Monte, Hain Celestial, Hormel, Monster Beverage, Tyson Foods and Kraft Heinz. All the recipients scored poorly on a recent report from Ceres entitled
Feeding Ourselves Thirsty: How the Food Sector is Managing Global Water Risks. Out of a possible 100 points, “The packaged food and beverage industries had median scores of 27 and 26.5, respectively, while agricultural products and meat industries were 13.5 and 10,” Ceres reported.

“Global water risk management is a critical aspect of financial risk oversight in the food and beverage sector,” the letters state.

“Global food companies need to step up their risk management of both water scarcity and water pollution,” Stu Dalheim of letter signatory
Calvert Investments said. “Beyond concerns about quarterly returns, our global food supply and water security is at risk.”

The letters specifically request that the targeted companies respond to the
CDP water questionnaire. “CDP’s water program provides a clear framework that allows for standardized effective reporting and action,” the letters state. “Companies that respond to the questionnaire signal to our investor coalition that they are strategically measuring and addressing water--‐related risks.”

“Water pollution is another growing problem,” the coalition stated. “Fertilizer run-off from farms is the most significant source of water pollution in the U.S. and can create toxic algal blooms that trigger oxygen-deprived 'dead zones.'”

“Pollution from farm runoff poses environmental, reputational and financial risk to food companies, especially those in the meat industry,” said Mary Beth Gallagher of the Tri-State Coalition for Responsible Investment, an ICCR member. “We’d like to see exposed companies outline specific practices for improving water quality for their facilities, their contract facilities and their suppliers to reduce the impacts of their operations on the right to water in nearby communities.”

And Julie Gorte of
Pax World Management said, “We need a deeper understanding of how companies in our portfolios are not only analyzing these risks and reporting, but developing robust strategies for managing them.”

Sustainable investors have consistently emphasized to companies in their portfolios the long-term financial benefits of sustainable business practices. Yet here we are, in the tenth and final year of the UN's
Water for Life initiative, and it does not appear that companies in sectors that use as much as three-quarters of the planet's freshwater sources are entirely on board. Ceres and its institutional partners are to be commended for persisting in demanding results that are sustainable as well as financial. One can only surmise, given the results recorded in Feeding Ourselves Thirsty, that they will have to continue.

 

 
Home
| Reports | SRI Financial Professionals Directory | Tools | News | SRI Performance and Trends | About Us | Contact
© SRI World Group, Inc. - All rights reserved
Terms of use - Privacy Policy - OneReportTM Network