Asahi Group Holdings, Colgate Palmolive, Ford Motor Company and Toyota Motor Corporation are among the global corporations achieving an A rating for their efforts to improve water security, according to the first global ranking of corporate water stewardship revealed this week by CDP — which holds the most comprehensive dataset of publicly available corporate water information collected on behalf of investors.
In a year when the World Economic Forum has ranked global water crises — including drought, increased risk of flooding and deteriorating water quality – as the greatest threat facing the planet over the next decade in terms of impact, CDP’s new global water report, Accelerating action, shows that some companies are beginning to move ahead of the pack in addressing water concerns.
Eight businesses from four sectors have joined the CDP Water A List, which highlights those companies that are on the path to sustainably managing water resources. CDP has determined that the companies — which also include Harmony Gold Mining Co.Ltd, (South Africa), Kumba Iron Ore (South Africa), Metsä Board (Finland) and Rohm Co., Ltd (Japan) — are taking action to mitigate corporate water risk and realizing opportunities in ways that not only reduce their own impacts but, critically, improve water security for the environment and other water users.
There is growing interest among institutional investors in water-related risk, opportunity and disclosure, with over four times the number of investors backing the CDP request this year compared with the program's first year in 2010. This year 617 institutional investors asked 1,073 of the world's largest publicly listed companies across industry sectors with high water vulnerability or impacts to disclose how they are adapting and responding to worsening water security. CDP's new global water report analyzes the 405 company responses to this request — over twice the number of companies analyzed in 2014.
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Ingrid Dyott, portfolio co-manager, SRI/Core Equity at Neuberger Berman: "Looking at water data is a part of identifying quality. One risk in investing is not knowing what you own. Looking at water issues through CDP gives investors a fuller sense of the investment opportunity. In industries where water is relevant, it is absolutely critical therefore that companies disclose to CDP."
While there are signs of progress in corporate water action from this group of leading companies, there is a gap with the rest of the market that is of increasing concern to investors. Despite ongoing water crises such as droughts in California and parts of Brazil, more than half (53 percent) of companies are failing to conduct a comprehensive risk assessment — a basic first step for any company seeking to ensure business resilience against water issues.
This lack of transparency is concerning given over two-thirds of oil and gas companies (65 percent) disclosing to investors via CDP say their business is vulnerable to substantive water risks. Furthermore, the bottom line has already been hit for almost half (43 percent) of these companies due to water-related challenges in the past year – among the highest of the eight sectors featured in CDP's report and much higher than the cross-sector average of 27 percent.
Cate Lamb, head of water at CDP, says: "Just as oil was to the 20th century, water is fast becoming the defining resource of the 21st century. Unfortunately however, unlike oil, there is no replacement for water. Companies using CDP's water program are beginning to understand that taking a strategic view of how they manage water can enhance competitive advantage, investor appeal and business resilience. CDP's Water A List in particular understand that taking a more prudent approach to managing water will ultimately be of benefit to their business and wider stakeholders. It's now time to close the gap."
Also this week, WRAP (Waste & Resources Action Programme) published the second interim report of Courtauld Commitment 3, which shows that manufacturing and retail waste has significantly reduced against the baseline 2012 figure.
Activity by signatories has helped achieve a considerable reduction in traditional grocery ingredient, product and packaging waste in the manufacturing and retail operations of participants, down 80,000 tonnes against the 2012 baseline. This shows strong progress towards the target standing at 3.2 percent after the first two years, against the overall 3 percent target by 2015 for the agreement.
The latest figures also show that efforts to reduce carbon dioxide emissions associated with packaging continue to exceed the target of maintaining a zero-increase level of CO2 emissions. The latest figures show a sustained positive reduction in carbon dioxide emissions of 3.9 percent.
Progress remains well ahead of the packaging target, despite a backdrop of growing sales (up by more than 5 percent for signatories who reported sales data). Changes in the mix of packaging materials and increases in recycling rates resulted in the overall reduction in carbon dioxide emissions, despite packaging weight actually increasing by 0.7 percent over this same period. The increase in packaging weight itself was for single use transit packaging, rather than household (primary) packaging which continues to decrease by weight.
Progress against the household food waste target is not collected annually, and 2015 data will be available for final year reporting in 2016.
Dr Richard Swannell, Director of Sustainable Food Systems at WRAP, said: “I’m delighted with the progress towards targets in the first two years of the Courtauld Commitment Phase 3. What makes Courtauld so effective is the sector-wide approach to tackling the most impactful areas - not just thinking about what will help your business, but what will make a more environmentally and economically effective supply chain. It’s important we continue to strive in the final year of Courtauld Phase 3 and push the boundaries in the preparation for Courtauld 2025.”
Although redistribution of surplus food to people is not a specific target under the Courtauld Commitment, redistribution does contribute towards the manufacturing and retail target. WRAP has worked with signatories to track progress and increase action in this area. With more signatories reporting data after two years, and a much more robust data set based on a re-clarification of the definition, WRAP estimates the level of redistribution to have increased by three quarters on the 2012 baseline, currently standing at around 20,000 tonnes.
Environment Secretary Richard Lochhead said; “The Scottish Government is committed to helping businesses cut waste and increase recycling. I welcome the progress the grocery sector is making on reducing the impact of packaging and particularly food waste. Recently I announced my intention to set a national food waste reduction target for Scotland as we need to make the most of the food that we already produce and eliminate needless waste, so I would encourage the grocery sector to build on this achievement.”
Welsh Government Natural Resources Minister Carl Sargeant said; “It is encouraging to see that we are moving in the right direction and are well ahead of our target. Preventing the landfilling of waste is a commitment we have made and forms part of the Welsh Government’s Environment Bill proposals. All of us can still do more but I’m pleased at the progress that Courtauld signatories have made at the end of Year two.”’
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Published Oct 30, 2015 5pm EDT / 2pm PDT / 9pm GMT / 10pm CET