Water risks: Better management needed says CDP

The think tank CDP released its latest global water report for 2016 at the UN’s COP 22 Climate Change meeting in Marrakesh, Morocco which took place this week. The report highlights how companies are managing water risks as the global climate changes and is seen as critical in meeting climate change targets now the Paris Agreement has entered into force.

The data for the report is provided by 607 companies in response to CDP’s request for information made on behalf of 643 institutional investors with US$67 trillion in assets.

Water risks: better management needed

CDP said that water could make – or break – global efforts to implement the Paris Agreement as companies will need to get a handle on water management in order to achieve their climate goals. Analysis reveals one in four (24%) greenhouse gas (GHG) emissions reduction activities reported by companies depend on a stable supply of water. However, better management of water could enable companies to reduce their carbon emissions. More than half of companies said more efficient use of water has led to lower GHG emissions.

However, the report shows that company progress has stalled when compared with annual trends. For example 61% of companies say they track their water use – just 3% more than did last year. While companies have made progress on transparency – 2016 saw the largest response yet to CDP’s annual request for investment-relevant information on water – over half (677) of the companies asked to disclose by investors failed to do so.

For the second year in a row, CDP and sustainability firm South Pole Group scored companies on their environmental management and governance of water and published CDP’s Water A List – an index of companies who are judged to be following best practice in the field of sustainable water management. In a sign that a growing number of companies are taking a more comprehensive approach to water management, 24 companies were named on the CDP Water A List this year, up from the eight named in 2015. This year’s Water A List includes BASF SE, Coca-Cola European Partners, L’Oréal and Suntory Beverage & Food. Six firms have made it to the A List for the second year running, including Colgate Palmolive Company, Ford Motor Company and Toyota Motor Corporation.

Companies which did not respond to the investor request for data received an F, denoting failure to disclose. The energy sector continues to be the laggard industry on water transparency CDP said , with only 29% of those companies requested to disclose providing information to their investors via CDP this year. The report highlights Exxon Mobile Corporation, Chevron Corporation, Royal Dutch Shell as the three largest energy companies (by market capitalization) who, since 2012, have consistently failed to respond to investor requests for disclosure through CDP’s water program.

CDP’s CEO Paul Simpson said: “This year’s findings offer two clear lessons for the private sector. Firstly, that water risks can rip the rug from right under business, posing a serious threat to bottom lines. Secondly, and crucially, that water will be a fundamental global commodity in the transition to a low-carbon economy. Every drop of clean, sustainable water will be essential for the emissions reduction activities countries and companies have planned. This is a wake-up call to companies everywhere to take water more seriously.”

Meanwhile participants from 42 countries at the climate change meeting have signed up to joining the NDC Partnership which aims improve co-operation between countries so that developing countries have the support and technical expertise they need to meet their climate change targets agreed at Paris which are defined as their National Determined Contributions.

sustainability

Last Updated: 20 November 2016

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