Ethical Performance
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CDP turns its attentions to corporate water use

December 2009

A huge alliance of institutional investors is to ask 300 of the world’s largest corporations for data on their water use.

The Carbon Disclosure Project (CDP), which has hitherto concentrated on gathering carbon dioxide emissions data from businesses, will send out a questionnaire in April requesting details of water use and any associated corporate policies.

The companies – all in ‘water-intensive’ sectors – will be given until August to respond, and the results will be published by the end of 2010. The full data will be circulated to all CDP signatories, which include most of the world’s largest institutional investors and together manage assets worth $55trillion (£33tn, €37tn).

The CDP believes water will be become a major corporate responsibility issue in the coming years and that the time is ripe to extend its brief to this topic. It hopes its involvement will in itself move the issue up the agenda.

The Organization for Economic Co-operation and Development forecasts that, without new policies, 47 per cent of the world’s population will be living in areas of ‘high water stress’ by 2030.

The CDP says awareness and understanding of water-related risks and opportunities in the business world is ‘generally limited’, and that it must play a role in raising that awareness. Its investor members also feel they need more corporate disclosure on water so they can make better-informed investment decisions.

Work has already begun on the questionnaire, which will be subject to consultation until the end of January and a final review by CDP signatories in February and March.

The questions are likely to focus on water usage, exposure to water stress in companies’ own operations and in their supply chains, and water management plans and governance.

The 300 targeted businesses will be in sectors such as chemicals, forestry and paper products, food and beverages, mining, pharmaceuticals, and power generation. In future the questionnaire will be sent to a greater number of companies in water-intensive sectors and in regions facing water stress.

Investment managers that have specifically backed the water disclosure programme include Norges Bank Investment Management, which runs Norway’s €280bn ($423bn, £255bn ) Government Pension Fund, APG Asset Management, Dexia Asset Management, and the UK fund manager Schroders.

The CDP has been widely credited with increasing corporate disclosure on climate change. Although in its early days  many companies were slow to respond to its demands, climate disclosure levels are now as high as 82 per cent among Global 500 companies.
The latest move suggests the CDP’s methods may eventually be used as a template in other CSR-related areas beyond climate change and water.

Carbon Disclosure Project | Global | Water

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