Ethical Performance
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‘Broader action’ needed on water stewardship

December 2011

Little progress has been made on water-related issues by large corporations after initial promises on the CSR issue last year.

Research by the Carbon Disclosure Project (CDP) shows that the issue has made little ground compared with climate change in terms of board oversight, strategy and policy. The CDP’s first water report last year said that companies had moved quickly to work up CSR strategies on water, reacting swiftly to the social and environmental impacts emerging in the area.

Though water has come further and further into the CSR limelight, “corporate understanding of water as a business concern” continues to lag behind climate change. Of the respondents to the Water Disclosure survey, 57% of firms had board-level oversight of water policies, strategies or plans, compared with the 94% of firms participating in the CDP’s main climate change survey.

Though this year’s report shows improved transparency on water management, fewer companies are now reporting concrete targets on water, with progress on publicly-announced strategies and understanding of the linkages between water and energy use stagnating after initial progress. Awareness of supply chain risk is also down sharply, from half in 2010 to around a quarter this year.

But the issue remains pressing. More than half of the firms surveyed report exposure to water-related risks such as flooding, scarcity and reputational damage, mainly in the short-term. Meanwhile, 38% of companies have already faced water-related business impacts, including disruption to operations from water shortages.

Paul Simpson, chief executive officer of the CDP, said: “Some of the largest multinational companies have experienced the detrimental effects that water can have on their bottom line.

“The findings released today illustrate the very near-term nature of water-related impacts. We need to see more companies understand that water is a critical issue, requiring greater board-level attention than it currently receives.

“Those corporations that navigate the challenges effectively will be able to profit from the significant opportunities that result from a robust water strategy.”

Nick Main, Deloitte Touche Tohmatsu Limited’s head of sustainability, added: “It is promising to see that a growing number of companies are recognising the importance of having strategies that respond to the increasing risks and opportunities arising from dependencies on this increasingly vulnerable resource.

“There is a need for broader action by companies to address water stewardship both at the enterprise and product levels.”

Carbon Disclosure Project | Global | Water

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