CDP report highlights importance of water-related issues, calls for greater transparency

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24 Oct 2012

The Carbon Disclosure Project (CDP) has released the 2012 edition of its CDP Global Water Report, which summarises the results of a survey on water-related issues of the largest companies by market capitalisation included in the FTSE Global Equity Index Series (the Global 500). The survey revealed a sharp rise in company reports of detrimental impacts from drought and other water-related issues, but a need for greater transparency in water-related risk assessments provided to investors.

318 Global 500 companies were invited to respond to a CDP Water Disclosure information request because they operate in sectors which are water-intensive or exposed to water-related risk. 191 of the 318 companies responded and the analysis in the report, prepared by Deloitte on behalf of the CDP, is based on the 185 responses submitted by early August.

The 2012 report reveals that over half of companies (53% up from 38% in 2011) have experienced negative impacts from water-related challenges including water scarcity, flooding, rising compliance costs, regulatory uncertainty and poor water quality in the past five years.

Although there is an increased awareness of water-related risks and issues amongst respondents, the report notes that progress in responding to them is varied and in many cases considered insufficient.  The report sees a need for greater corporate accountability through more transparency, concrete targets and goals and board level oversight of water-related issues.

CDP’s goal is to enable better decision making by providing investors, companies and governments with high quality information on how companies are managing their response to natural resource constraints.  Water issues are a key component of sustainability reporting for water-exposed companies.

The report notes:

Accounting for and valuing the world’s natural capital is fundamental to building economic stability and prosperity and the global economy will favor businesses that take a pro-active approach to water stewardship. Companies that transform their business and work to safeguard valuable water resources have the potential for both short and long-term cost savings, sustainable revenue generation and a more resilient future.

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