Supply Chain

New Report Calls on Food Giants to Use Vanishing Water Resources More Efficiently

Third edition of Feeding Ourselves Thirsty reveals improved scores in water-management practices from industry giants such as Mars, Coca-Cola and Unilever, but finds insufficient corporate action overall in an increasingly water-stressed world.

Published 5 years ago | About a 4 minute read

Image: Matthias Böckel/Pixabay

Major food companies need to adopt far stronger practices to reduce their demands and impacts on limited water resources, according to a report released Wednesday by sustainability nonprofit Ceres.

The intensifying effects of climate change are placing an unprecedented strain on water resources and agricultural productivity, hampering the growth prospects of the $5 trillion global food sector. The latest edition of Feeding Ourselves Thirsty, a benchmarking report and investor tool, sounds the alarm for food companies to scale action to conserve freshwater in order to mitigate risks and ensure long-term profitability in our rapidly warming world.

Using existing corporate disclosures including 10-K filings, sustainability reports and responses to CDP water and climate information requests, the report ranks the 40 largest global food companies based on their management of water through governance and strategy and in their direct operations, manufacturing and agricultural supply chains. This is the third edition of the report since 2015, allowing companies to view their progress over time and analyze how they compare to competitors. The report also empowers investors with the guidance and relevant data needed to evaluate the water risk management of these companies.

“Growing and processing the food we eat is a thirsty business, consuming more than 70 percent of the world’s increasingly strained water resources,” said Brooke Barton, VP of Innovation and Evaluation at Ceres and co-author of Feeding Ourselves Thirsty. “Yet as our report reveals, the C-suite still views water as a cheap and limitless input, ignoring its central role to the profitability of their business. Despite the broader perception, we’re encouraged by the growing acknowledgement of water risks and believe any action taken to advance internal water risk management is a step in the right direction. Still, a long path lies ahead for many of the industry’s largest water users and polluters.”

Companies were divided into four industry categories (agricultural products, beverage, meat and packaged food), and then analyzed against actions in four categories of water risk management. The top scoring companies, out of a possible score of 100, the top-scoring packaged food companies were Unilever — up 14 points from 2017; followed by Nestlé, General Mills, PepsiCo and Danone. Topping the beverage list are Coca-Cola (up four points from 2017), Diageo, Molson Coors, AB InBev and Constellation Brands. Olam and Smithfield Foods led the agricultural products and meat categories, respectively. And Mars, Inc. (packaged good) was the most improved company, increasing its score by 27 points since 2017.

The report highlights some significant improvements in key areas including board oversight of water risks and strategies, establishment of water use or efficiency targets for operations; as well as assessment of water risks beyond throughout their agricultural supply chains. As indicated by their scores, some of the most improved companies are recognizing that smart water management is a business imperative.

“Creating meaningful and material water use goals that are grounded in science is an integral first step in mitigating water risk across global supply chains. We continue to look for ways to minimize our footprint in water stressed areas and appreciate the recognition in this year’s Ceres report as the most improved company,” said Barry Parkin, Chief Procurement and Sustainability Officer at Mars. “We’ve accelerated our efforts to steward water resources and will continue to prioritize these efforts within our 'Sustainable in a Generation' Plan.”

“It is a tremendous honor to be recognized for our water stewardship throughout our supply chain,” said Mary Jane Melendez, Chief Sustainability and Social Impact Officer at General Mills. “The work requires extensive stakeholder collaboration to protect the water quality and supply that benefit our growers, communities and the environment. The progress we have made to date would not have been possible without dedicated partners to help strengthen and expand our impact.”

But the analysis also found that, despite 77 percent of companies in the report specifically mentioning water as a risk factor in their financial filings, effective management of water risk still lags, with an average overall company score of 38 out of 100. The sector saw limited progress on critical issues, such as conducting rigorous risk assessments within the agricultural supply chain and implementing sustainable sourcing commitments. Meat companies, which are acutely vulnerable to water risks, also continue to do the least to manage them.

“Food and beverage companies are some of the most common holdings in investor portfolios, as well as some of the biggest consumers of freshwater resources,” said Dennis van der Putten, Director of Sustainability and Strategy at ACTIAM. “We have set ourselves the target to have a water-neutral investment portfolio by 2030, meaning that businesses we invest in consume no more water than nature can replenish. We expect companies to take responsibility beyond the gates of their sites and set targets that address water use and pollution challenges within watersheds critical to their supply chains. Companies who proactively address water risks will be better positioned to succeed in an increasingly water-scarce world.”