Water challenges could restrict business growth, major companies predict

By Caroline SCOTT-THOMAS contact

- Last updated on GMT

Only a quarter of food and consumer goods companies said they were engaging with suppliers on water use - while 77% said their supply chain was at risk
Only a quarter of food and consumer goods companies said they were engaging with suppliers on water use - while 77% said their supply chain was at risk

Related tags: Water

More than four-fifths of food and consumer goods companies say that water poses a fundamental risk to their business, according to a new report from CDP.

The report​ was based on responses from 174 large companies, including food industry giants like Unilever, Diageo, Nestlé, Mondelez, Danone and the Coca-Cola Company, among others.

It found that 81% of those in the food and consumer goods sector were concerned about water availability and quality, and one in five (22%) companies involved in the report predicted water problems would inhibit business growth.

 “One irrefutable fact filtering through to companies and investors: the bottom line is at risk from environmental crises,”​ said CDP CEO Paul Simpson in a foreword to the report. “…Leading companies increasingly recognize that business as usual approaches to water management are no longer sufficient.”

Of the eight business sectors covered by the report, the food and consumer goods industry had the highest number of respondents reporting exposure to supply chain risks, at 77%. However, nearly half (48%) did not require their suppliers to report on their water use, risks or management.

Forty-five per cent of food and consumer goods firms said they had experienced “detrimental impacts related to water challenges in the reporting year”, the report said.

They saw the biggest risks from water stress and/or scarcity (47%), flooding (8%) and declining water quality (8%).

Among measures used to tackle water concerns in the sector, 71% said they had set a target to reduce water use, while 26% said they were engaging with suppliers and 29% said they were pursuing more sustainable agricultural practices.

Meanwhile, the European Union has proposed legislation that would see about 6,000 companies required to disclose their water use, among a raft of environmental, social and governance criteria.

The report was carried out on behalf of 573 institutional investors with US$60 trillion in assets. It is available online here​.

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