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'Global corporate giants investing hugely in water security'

New Delhi : Global business giants are investing hugely in water security and management even as a growing number of investors are recognising the value in water and are increasingly developing ways to better account for this in their investment decisions.

According to the annual global water report published by CDP, the leading non-profit global environmental disclosure platform, companies committed to $23.4 billion of investment in water projects in 2017 such as desalination plants, reclaiming wastewater or improved irrigation to avoid droughts - across 1,000 projects in 91 countries.

The report - A Turning Tide: tracking corporate action on water security - highlights growing accountability and performance in water management with a 40 per cent increase in disclosure since 2016 and a 193 per cent increase in the number of companies featured on the CDP Water A List.

USA (13), Japan (12) and UK (9) are the three countries with the most companies on the water A List.

However, despite several leading Indian corporates including Tata Steel and ITC taking up water security as a priority issue, no Indian corporate was able to make it to 2017's A list. Some Indian companies have been part of the list of those who made water-related disclosures in previous years.

The 2017 water report analysed water data from 742 of the world's largest companies including Nestle, Burberry and Kellogg’s and finds escalating boardroom engagement in water issues.

In total, 4,653 companies were asked to report to CDP on their water activities in 2017, with a 44 per cent response rate.

The report indicated that the energy sector continues to be the biggest laggard in terms of disclosure, with 101 out of the 138 energy companies asked to disclose failed to do so.

Exxon Mobil and Royal Dutch Shell are among those companies persistently failing to reveal water data to investors via CDP.

Also, seven per cent of companies including Diageo (UK), Colgate Palmolive (USA) and Nestle (Switzerland) are now putting a higher price on water internally to reflect its increasing business cost.

A group of 53 companies (seven per cent are establishing internal values on water that account for social and environmental costs and benefits that are often absent from pricing and decision making.

The report states that when water is undervalued, the business case for action is often misunderstood or difficult to see.

CDP quoted a recent report by YES Bank, a leading Indian private sector bank that applied the Natural Capital Protocol to calculate the real cost of water for a hypothetical beverage company based in Tamil Nadu. "The findings suggest that the risk-adjusted price for water was about 18 times the current water cost for industries in the region. This real cost of water represented some 10 per cent of the company’s net profit for the year and nearly seven per cent of EBITDA. The study also found that 98 per cent of the company’s revenue could potentially be at risk due to inadequate water availability", the report added.

"With increasing economic activity, natural capital assets such as water are becoming scarce, directly affecting quality of life and business. I believe placing a real value on water which is inclusive of social and environmental externalities, would address the challenges presented by water scarcity and facilitate effective decision making", the CDP report quoted YES Bank CEO Rana Kapoor as saying.

CDP said the annual report is aimed at companies and investors seeking to understand how they can play their part in delivering a water-secure world. It sets out what a water-secure world looks like, the private sector actions that will contribute to its achievement, and how companies are overcoming the barriers to water security – most importantly, the failure to properly value our fresh water resources in today’s economy.

Globally, the companies termed the fop five risk drivers as increased water scarcity, flooding, drought, increased water stress and climate change while the top five risks were higher operating costs, supply chain disruption, water supply disruption, constraint to growth and even brand damage.

Companies in India increasingly report that both quality and quantity issues are constraining their business, CDP India Director Damandeep Singh was quoted as saying in a IANS news report.

"With uncertainty in monsoon rains and declining water availability many companies have stepped up water conservation efforts in close collaborations with stakeholders in their watersheds and river basins. However, many more initiatives are required which include incorporating the true value of water into their core business strategy," he said.

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