Ethical Performance
inside intelligence for responsible business


Companies ‘all talk and no action’ on water scarcity

December 2012

Most of the world’s largest companies are guilty of lacking a long-term water management strategy, even though they discuss the issue in corporate documents.
And, in their CSR reports, few examine the water footprint of any part of their supply chain and none tackle the subject in the entire chain.

This is a finding by professional consultancy KPMG in its latest Sustainable Insight publication.  

It found the transport sector had the worst record, with only half the largest companies considering water issues at all. The second lowest reporting rates were noted in the utilities sector, with 62%, a figure that KPMG’s analysts call “somewhat surprising, given the water intensity of power generation”.

In the international league of those producing CSR reports, specific policies to reduce water use were seen in 95% of Indian companies, 69% of Spanish businesses and 66% of UK entities. At the bottom of the league, the figure for China is 24% and for Japan 27%. KPMG says businesses slow to reduce water consumption are likely to face growing public and investor pressure on this issue.

Vincent Neate, KPMG’s UK head of climate change and sustainability, advises companies wishing to convince investors of their future growth and profitability to consider ten questions, including whether they understand and are prepared for their exposure to water scarcity risks, how much water is used in their extended supply chain, and how they are communicating their water policy to key stakeholders.

Neate added: “Companies yet to develop a long-term strategy are almost certainly increasing their organisation’s overall risk profile and exposing their businesses to potential disruption. The first and most immediate step must be to develop a clear understanding of the organisation’s water footprint and identify which areas of the business are at risk.”

Similar cautions are issued by the Carbon Disclosure Project (CDP) in its newly released 2012 Global Water Report. The report points out that, although the number of investors requesting vital water information is up by 33%, the proportion of companies responding has stagnated and only a few of them say directors oversee water issues.

Yet the CDP finds companies are reporting high levels of water-related risks and a third of them cannot state whether water shortages are a problem to their suppliers.

The CDP gives a fresh warning that businesses need to act now to beat the threats brought by water scarcity, quality, competition and excessive use. It adds another warning that this year’s US drought caused soaring global commodity prices.

KPMG | Global | Water


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