Celebrating Water's A List

By Tom Freyberg, Chief editor

It’s becoming clear that the mismanagement of water can result in business and social failure and impact companies’ bottom lines. A new report from the CDP reveals some interesting truths about how companies are seeing water.

Let me ask you a question. Which global companies would you say are making good progress when it comes to addressing water security? More specifically, who would you grade with an “A” for their efforts on tackling water issues head on?

Well, according to a new report by non-profit CDP, it’s car manufacturers Ford and Toyota, Japanese IT company Rohm and US firm Colgate Palmolive Company.

Called the Water A List, these companies were highlighted by CDP for being “on the path to sustainable managing water resources”. The companies are reported to be: “taking action to mitigate corporate water risk and realizing opportunities in ways that not only reduce their own impacts but critically, improve water security for the environment and other water users.”

By highlighting and celebrating these eight companies, it’s hoped that it will raise performance across the market. After all, who wants to see their competitors named and celebrated?

The report’s timing couldn’t have been better. The World Economic Forum has now ranked global water crises, including drought, deteriorating water quality and flooding, as the greatest threat facing the planet over the next decade in terms of impact. And the report came out ahead of the first Financial Times Water Summit events in London, which I was invited to attend.

To compile the report, over 600 investors asked 1,072 of the world’s largest publicly listed companies across industry sectors with a “high vulnerability or impacts” to disclose how they are adapting and responding to worsening water security.

From this, over 400 company responses were analysed. Interestingly, from those that responded, 53% of companies are failing to conduct a comprehensive risk assessment. As you will know, this is basic step for businesses to ensure resilience against water issues. The oil and gas industry, often picked up for its thorny relationship with water, is also not meeting investor demands for transparency and action, according to the report. In the past year alone, water related challenges affected the bottom line of 43% of the oil and gas companies that responded.

Although this might seem a little “doom and gloom” reading, the water challenge can actually be seen to spur on company development. Report authors added that as well as being a source of substantial business failure, water can also be a significant driver for innovative growth. In terms of how this translates into what investors want to see, it’s companies that are beginning to implement integrated, strategic, business plans that factor in water stewardship. In layman’s terms: water needs to be included from the start, not as an afterthought.

Tom Freyberg, Chief editor