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Report: Largest Companies Fall Short in Managing, Disclosing Water Scarcity Risks

February 12, 2010

Summary: Despite growing water-scarcity risks in many parts of the world, the vast majority of leading companies in water-intensive industries have weak management and disclosure of water-related risks and opportunities, according to a report issued today by the Ceres investor coalition, the financial services firm UBS and financial data provider Bloomberg.

The report evaluates and ranks water disclosure practices of 100 publicly traded companies in eight key sectors exposed to water-related risks. The report shows that many companies are not including material water risks and performance data in their financial filings, nor are they providing local-level water data, particularly in the context of facilities in water-stressed regions. Moreover, none of the 100 companies are providing comprehensive water data on their supply chains.

With analytical support from UBS, the report evaluates the quality, depth and clarity of water risk disclosure in both voluntary and mandatory corporate reporting through June 30, 2009. The data for the report was provided by Bloomberg’s Environmental, Social and Governance (ESG) data and analytics service.

The report assesses companies in eight key sectors: beverage, chemicals, electric power, food, homebuilding, mining, oil and gas and semiconductors.

The report scored the companies based on five key categories of disclosure: water accounting, risk assessment, direct operations, supply chain and stakeholder engagement. Within each category, sub-elements were divided to produce a final scored assessment based on the depth and clarity of corporate disclosures. An extra “opportunities” category was created for two of the eight industry groups – chemical firms and homebuilders – which resulted in those sectors being scored on a 0- to 112-point scale. Among the key overall findings:

  • The mining sector scored highest overall, followed by the beverage industry. Companies in the homebuilding sector had the lowest overall scores.
  • Only 21 companies disclose targets to reduce water use, and even fewer – just 15 companies – had goals to reduce wastewater discharge.
  • Only 17 companies report local-level water data and only a handful provide the information in the context of operations in water stressed regions.

Source: February 12, 2010 Ceres Press Release

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Prepared by: This message was distributed by Kellen Mahoney, who may be reached at e-mail: kmahoney@eetnews.com

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