CDP: World’s Largest Companies Ignore Water Withdrawal Risks

A CDP analysis of corporate water withdrawal published today shows that the world’s largest companies are using more of the resource despite greater awareness of the risks. The new study looked at water data from nearly 800 publicly listed companies representing $18 trillion.

Called Treading Water, the analysis found that 75% of companies report exposure to substantive water risks, up from 70% in 2015, but during the same period there has been a nearly 50% rise in companies reporting higher water withdrawals. The highest withdrawals occurred for companies operating in Asia and Latin America as well as in the following sectors: food, beverage and agriculture, manufacturing, and mineral extraction, CDP said.

Water risks have the potential to disrupt production, damage brands, and even cause companies to lose their license to operate in a region, according to the nonprofit global environmental disclosure platform.

Other takeaways from Treading Water:

• Only 31% of companies in high-impact sectors have incentives in place for C-suite executives on water-related issues.
• Retail was the worst performing and least transparent of all the sectors analyzed, outstripping the fossil fuel sector for the first time.
• Companies reported $38 billion in water-related financial losses last year.

Despite the enormous scale of the water withdrawal problem, several companies showed enough progress to rank at the top of CDP’s Water Security A List for 2018. They included AstraZeneca, Diageo, L’Oréal, and Microsoft. These companies demonstrated that they regularly assess their water risk exposure and implemented a strategic response to those risks, the nonprofit said.

Still, many organizations fail to incentivize better water issue management.

“The companies reporting to CDP are responsible for a huge proportion of global water use and pollution,” said Cate Lamb, director of water security at CDP. “While many of their practices and procedures currently contribute to the depletion of freshwater resources, these companies could also hold the key to a water secure future. This transition is full of possibility and opportunity — to succeed, those companies that affect our water, must work to protect it.”

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