Corporate Impact | October 25, 2023

Investors push corporations to better manage increasingly scarce water resources

Andrea Riquier
ImpactAlpha Editor

Andrea Riquier

ImpactAlpha, October 25 – Corporations are the largest consumers of water globally, which sets them up for conflict and risk as water scarcity becomes the new norm in many drought-stricken parts of the world. Yet the biggest corporate water users are making little progress toward managing the resource responsibly.

A report released Wednesday by sustainability consultancy Ceres evaluates the performance of 72 companies with the high water footprints against metrics set out by Ceres’ 2022 Valuing Water Finance Initiative, an investor-led effort that aligns with the United Nations 2030 Sustainable Development Goal for Water. 

The findings come as water concerns are grabbing a bigger share of the climate spotlight. Corporations face more than $300 billion in water risk, according to Ceres. 

Water stewardship

Ceres used corporations’ public disclosures to assess their vulnerabilities, opportunities, and strengths in water management. On the plus side, three-quarters of the 72 evaluated companies have set time-bound targets aimed at reducing the amount of water they use. But only 17% have set targets to reduce their impacts to water quality. Just 13% have targets to protect or restore ecosystems with specific consideration of outcomes related to freshwater supplies and aquatic biodiversity. 

And just over a third consider contextual factors – such as local watershed conditions, regulatory dynamics, and community water needs – when assessing water use risks. 

“Business-as-usual water management approaches that fail to adapt to the changing state of water resources have no place in our current reality,” Ceres said in the report. “Businesses must change the course by developing holistic and restorative water stewardship strategies to address water risks and embrace water-related opportunities.”

None of the companies assessed made it into Ceres’ highest-scoring category. But 11%, including Cargill, Inc., Danone SA, Microsoft Corporation, and Gap Inc., ranked in the second quartile. 

The laggards at the bottom of the pile included Hain Celestial Group, Monster Beverage Corporation, and Chiquita Brands International Sàrl.

The assessment shows that on average, companies are making the most progress in addressing issues of water quantity and board oversight, but still have significant work to do on public policy engagement, water quality, and access to water and sanitation. 

The report gives examples of company initiatives that address all of the various water management goals. But, it concludes, “companies must accelerate their efforts to advance their water stewardship strategies.”