CDP Report Shows Water Slowly Moving Up the Sustainability Agenda

In a resource-constrained world, companies will have no choice but to innovate in the products they sell, processes they use or the services they offer.

While many view climate change as a far-in-the-future problem we'll have to deal with down the line, water represents a resource that poses many risks for companies now, not just later. Look no further than the drought in Texas to catch a glimpse of the consequences of not having enough water.

Yet far fewer boards of directors have oversight of water-related issues compared to those for climate change, according to the CDP Water Disclosure Global Report 2011 released today.

The good news is that water issues are slowly making their way up the corporate sustainability agenda. Companies are increasingly taking stock of the business risks and opportunities posed by water, and they're also growing more adept at collecting and reporting water data, an essential component to managing any resource.

First, a few of the report's major findings:

• Sixty percent of selected Global 500, Australia 100 and South Africa 100 companies responded to the second annual CDP Water Disclosure information request, up from 50 percent in 2010. The CDP sent the request on behalf of 354 investors worth an estimated US$43 trillion.

• More companies view water as a business opportunity (63 percent) than a risk (59 percent). The opportunities range from the savings realized by using less to potential new products and services. Nearly 80 percent see those opportunities impacting business in the next five years.

• Not surprisingly, many companies have little visibility into their supply chains for water risk. Nearly 40 percent can't say whether their supply chains have any exposure to water-related risks. Just 27 percent report supply chain risks, compared to 55 percent who disclosed risks in their direct operations.

Next page: How companies are leading on water management