Water Becomes the New Carbon for World's Largest Companies

Water Becomes the New Carbon for World's Largest Companies

Image CC licensed by Flickr user peasap

The Carbon Disclosure Project has turned its attention to the vast amounts of water being used by the world's largest corporations, asking them to disclose consumption, risks and opportunities in the same manner as they'd report greenhouse gas emissions.

The nonprofit sent questionnaires to a total of 302 companies seeking data on behalf of 137 institutional investors in the same way it first nudged companies to measure and report their greenhouse gas emissions.

"Much of the impact of climate change will be felt through water and as we face increasingly scarce water resources, we can now provide the same system to highlight companies' ability to operate in a water-constrained world," CDP Chief Operating Officer Paul Simpson said in a statement.

Water has in recent years garnered increasing attention as an emerging business risk for companies around the world. Investor advocacy group Ceres recently analyzed the disclosure practices of some of the world's largest public companies, concluding that most fail to manage and disclose the risks they face from water scarcity.
The CDP targeted water-intensive sectors for the inaugural questionnaire, including automotive, construction, electric utilities, fast moving consumer goods, food and beverage, mining, oil and gas, and pharmaceuticals. The companies fall within the Global 500, but the nonprofit encourages all companies to participate in CDP Water Disclosure, which it launched in November.

Several companies have already publicly committed to respond to the 11-page questionnaire, including Ford, Molson Coors, L’Oréal, PepsiCo and Reed Elsevier.

"We recognize that these environmental issues are increasingly important to our stakeholders, including our customers, investors and business partners," Sue Cischke, Ford's group vice president of sustainability, environment and safety engineering, said in a statement. "Water conservation and greenhouse gas reduction are integral to Ford's global sustainability strategy. By reporting on them, we support positive social change and reduce the environmental impact of our facilities."

Companies that go through the process of evaluating and reporting their water use can better identify water hot spots in its operations, understand water risks, create opportunities for innovation and future proof themselves from water impacts, according to CDP.

The CDP questionnaire asks companies to disclose the percentage of key water-intensive inputs that come from water-stressed regions, how water-related issues pose significant market opportunities, and habitats significantly affected by company-related water discharges or runoff, among other inquiries.

As it does with emissions data, the CDP will analyze questionnaire responses and summarize the findings in an annual report. It will produce the first report later this year. The deadline to respond to the questionnaire is July 31.

Image CC licensed by Flickr user peasap.