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Indian Companies Are Spending Heavily To Mitigate Water Supply Risks, Report Finds

The report highlights growing accountability and performance in water management with a 40% increase in disclosure since 2016 and a 193% increase in the number of companies featured on the CDP Water A List

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According to a report published by Carbon Disclosure Project (CDP, an environmental disclosure platform), CDP Global Water Report 2017: A Turning Tide: tracking corporate action on water security, on 7th November 2017, big businesses are investing heavily in to water management, reaching record levels. An analysis of water data from 742 of the world's largest companies including Nestle, Burberry and Kellogg’s and finds escalating boardroom engagement in water issues. The report highlights growing accountability and performance in water management with a 40% increase in disclosure since 2016 and a 193% 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.

Some of the key highlights of the report are that “Companies committed to US$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” and “In India, companies are spending heavily to mitigate the risk of water supply with Tata Steel US$38 million, ITC along with MNCs like Diageo, L’Oréal, and Symrise AG also reporting spends in millions”. The report also adds, “The energy sector continues to be the biggest laggard, 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” and that “7% 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, (7%) are establishing internal values on the 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.

“From Bangladesh to Peru and the US, climate risks - and in particular water risks - have been very real in 2017. From storms to droughts, and floods to forest fires, the damage has been enormous. It is, therefore, encouraging to see a growing number of water leaders coming to the fore. South Pole Group believes companies need to continue to improve their understanding, management, and transparency of water risks, in order to help inform better decision making. Together with CDP, we are committed to delivering a water-secure world”, said Renat Heuberger, CEO, South Pole Group, CDP's water scoring partner.

Paul Simpson, CEO, CDP said, “The stakes are high as we assess corporate progress towards a water-secure world. From brand damage to disrupted supply chains, increased operating costs to constrained growth, water security is now big business and poses increasingly significant threats and opportunities to global firms. Our research shows more large corporations rising to the challenge with the number of A List companies nearly tripling in a year and 7% using internal accounting to assess the true value of water to their business. Congratulations to those organizations leading the way.”

The report is based on data disclosed to CDP by 742 organizations in response to requests from 639 institutional investors with $69 trillion in assets. They are part of a wider pool of 2,025 organizations worth approximately US$20 trillion in market capitalization that reported on water management to CDP this year. These companies collectively withdrew 5.6 billion mega-litres of water this year, more than the volume of Lake Michigan. Thirty-four purchasing organizations with a combined annual spend of US$1 trillion also put their name to this year’s disclosure requests.

(Source: CDP Global Water Report 2017)

In total, 4,653 companies were asked to report to CDP on their water activities in 2017, with a 44% response rate.  Whilst reporting progress should be celebrated, over half of requested companies fail to disclose and provide their investors and customers with water risk and opportunity data.  According to the G20, global water investment of US$6.4trn is required from the public and private sector to meet UN Sustainable Development Goal targets by 2030.

“Companies in India increasing report that both quality and quantity issues are constraining their business. 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. To extend PM Narendra Modi’s call to action -- not only do we need ‘more crop, but also more product, per drop of water’”, said, Damandeep Singh, Director, CDP India.