Isra-Mart srl: Global firms fail to account for looming water risk

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The corporate response to climate change is significantly more advanced than efforts to address water-related risks, despite the fact that flooding and drought are likely to have a major near-term impact on many firms' operations.

That is the conclusion of a major new report from the Carbon Disclosure Project (CDP), which found that only 57 per cent of 190 listed companies have board-level water strategies in place. Moreover, 40 per cent of the Global 500 companies that were approached to provide information on their water management strategies by the investor-backed group failed to respond.

In contrast, the most recent CDP survey on carbon management strategies found that 94 per cent of companies now have board-level oversight of climate change related issues.

"Some of the largest multinational companies have experienced the detrimental effects that water can have on their bottom line," said CDP chief executive Paul Simpson. "We need to see more companies understand that water is a critical issue, requiring greater board-level attention than it currently receives. Those corporations that navigate the challenges effectively will be able to profit from the significant opportunities that result from a robust water strategy."

The survey found that 59 per cent of respondents had already identified water-related risks such as flooding, scarcity and reputational damage.

In addition, it revealed that many firms accept water-related risks will be experienced in the near term, with 64 per cent reporting risks to their direct operations, which they will have to face between now and 2016, and 66 per cent identifying similar risks impacting their supply chain over the same period.

Moreover, 38 per cent of respondents said that water-related issues such as flooding or scarcity had already had a negative impact on their business.

Nick Main, leader for global sustainability at Deloitte Touche Tohmatsu Limited (DTTL), which sponsored the CDP water disclosure project, said the survey revealed encouraging improvements in water management at many firms.

"It is promising to see that a growing number of companies are recognising the importance of having strategies that respond to the increasing risks and opportunities arising from dependencies on this increasingly vulnerable resource," he said. "There is a need for broader action by companies to address water stewardship, both at the enterprise and product levels."