The CDP's Water Report Offers a New Paradigm for Water Management

The results of the 2011 Carbon Disclosure Project (CDP) Water Disclosure Global Report were released on November 16. The findings provide valuable insight as to how companies are addressing near- and long-term water-related risks and opportunities.

Selected companies from the FTSE Global Equity Index Series (Global 500) were invited to respond to the second annual CDP Water Disclosure information request because they operate in sectors which are water-intensive or exposed to water-related risks. This year the response rate for the Global 500 increased to 60 percent from 50 percent in 2010, representing 190 out of 315 companies which were sent the questionnaire.

The key results of the Global Report are summarized below:

The majority of responding companies have identified water as a substantial risk to their business. Fifty-nine percent (113) of respondents report exposure to water-related risk and over one-third of respondents have already experienced recent water-related business impacts, with associated financial costs as high as US$200 million.

Sixty-four percent of all risks in direct operations and 66 percent in the supply chain are reported to have the potential to impact business within the next five years.

Almost two-thirds of companies have identified water-related opportunities and most opportunities reported are near-term. Sixty-three percent (119) of respondents identified opportunities including cost reductions associated with increased water efficiency, revenue from new water-related products or services, and improved brand value.

Seventy-nine percent of the opportunities reported are expected to impact business within the next five years.

Water-related issues receive less attention than climate change at the board level. Fifty-seven percent (109) of Global 500 respondents report board-level oversight of water-related policies, strategies or plans. In contrast, 94 percent (371) of Global 500 respondents to the Investor CDP information request earlier this year reported board-level oversight of climate change.