CDP Water Disclosure 2010 Global Report - On behalf of 137 investors with assets of US$16 trillion
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
CDP Water Disclosure 2010 Global Report On behalf of 137 investors with assets of US$16 trillion Report written for Carbon Disclosure Project Carbon Disclosure Project by: www.cdproject.net +44 (0) 20 7970 5660 water@cdproject.net
CDP Water Disclosure CDP Water Disclosure 2010 Environment Agency Active Pension fund PhiTrust Active Investors Epworth Investment Management Portfolio 21 Investments 137 financial institutions with assets Essex Investment Management, LLC PSP Investments of over US$16 trillion were signatories Ethos Foundation QBE Insurance Group Limited to the CDP Water Disclosure 2010 F&C Management Ltd Railpen Investments questionnaire dated April 1, 2010, including: Fédéris Gestion d’Actifs Real Grandeza Fundação de Previdência e First Affirmative Financial Network, LLC Assistência Social Five Oceans Asset Management Pty Limited Rei Super Aberdeen Immobilien KAG RLAM Florida State Board of Administration (SBA) AEGON-INDUSTRIAL Fund Management Co., Ltd Robeco FRANKFURT-TRUST Investment Gesellschaft mbH Alcyone Finance Robert Brooke Zevin Associates, Inc Fukoku Capital Management Inc Allianz Group Rockefeller Financial Asset Management Group – Fundação Atlântico de Seguridade Social Amundi AM SRI Group Gartmore Investment Management Ltd APG Group Royal Bank of Canada Generali Deutschland Holding AG Aprionis RREEF Investment GmbH GLS Gemeinschaftsbank eG ARIA (Australian Reward Investment Alliance) SAM Group GOOD GROWTH INSTITUT für globale ASM Administradora de Recursos S.A. Vermögensentwicklung mbH Santa Fé Portfolios Ltda AustralianSuper Green Cay Asset Management Schroders AVANA Invest GmbH Green Century Funds SEB Aviva Investors GROUPE OFI AM Seligson & Co Fund Management Plc Bank Sarasin & Co, Ltd Henderson Global Investors, Sustainable & Sentinel Investments Banque Degroof Responsible Investment (SRI) funds Siemens Kapitalanlagegesellschaft mbH BBVA Hermes Fund Managers SNS Asset Management Blumenthal Foundation HESTA Super Social(k) Boston Common Asset Management, LLC HSBC Holdings plc Sompo Japan Insurance Inc. British Columbia Investment Management ING Sopher Investment Management Corporation (bcIMC) Jupiter Asset Management Standard Life Investments British Columbia Teachers’ Federation Salary KB Kookmin Bank Statewide Superannuation Indemnity Fund KBC Asset Management NV Superfund Asset Management GmbH CAAT Pension Plan KPA Pension Sustainable Capital Caixa Econômica Federal La Financière Responsable Svenska Kyrkan, Church of Sweden California Public Employees’ Retirement System Living Planet Fund Management Company S.A. Syntrus Achmea Asset Management California State Teachers’ Retirement System Local Authority Pension Fund Forum The Central Church Fund of Finland California State Treasurer Local Government Super The Daly Foundation Calvert Group, Ltd. Lothian Pension Fund The Pension Plan For Employees of the Public Canada Pension Plan Investment Board Service Alliance of Canada Macif Gestion Canadian Labour Congress Staff Pension Fund The Russell Family Foundation McLean Budden Capital Innovations Water Investment Partners The Westpac Group Mergence Africa Investments (Pty) Limited Catherine Donnelly Foundation Threadneedle Asset Management Meritas Mutual Funds Cbus Superannuation Fund Tokio Marine & Nichido Fire Insurance Co., Ltd. Mitsubishi UFJ Financial Group (MUFG) Central Finance Board of the Methodist Church Trillium Asset Management Corporation Mizuho Financial Group, Inc. Ceres, Inc. Triodos Investment Management Monega Kapitalanlagegesellschaft mbH Christian Super Union Asset Management Holding AG National Australia Bank Christopher Reynolds Foundation UNISON staff pension scheme National Bank of Canada CM-CIC Asset Management UniSuper National Pensions Reserve Fund of Ireland Colonial First State Global Asset Management United Methodist Church General Board of Neuberger Berman Commerzbank AG Pension and Health Benefits Newton Investment Management Limited CommInsure Vancity NH-CA Asset Management Connecticut Retirement Plans and Trust Funds VicSuper Pty Ltd Nissay Asset Management Corporation Co-operative Financial Services (CFS) Victorian Funds Management Corporation Nordea Investment Management Corston-Smith Asset Management Sdn. Bhd. Waikato Community Trust Inc Norges Bank Investment Management (NBIM) Daiwa Securities Group Inc. Walden Asset Management, a division of Boston Northern Ireland Local Government Officers’ Trust & Investment Management Company DekaBank Deutsche Girozentrale Superannuation Committee (NILGOSC) Deutsche Bank AG WARBURG - HENDERSON Northwest and Ethical Investments L.P. Kapitalanlagegesellschaft für Immobilien mbH Development Bank of Japan Inc. Oregon State Treasurer WestLB Mellon Asset Management (WMAM) Dexia Asset Management Pax World Funds Winslow Management, A Brown Advisory Domini Social Investments LLC Pension Protection Fund Investment Group Element Investment Managers PFA Pension Zurich Cantonal Bank 2
Contents Contents CDP Water Disclosure Signatories 2010 2 Foreword 4 Executive summary 5 Corporate water sustainability in context 8 Sector overview 10 Geographical overview 18 South Africa focus 20 Best practice 24 Sector snapshots Chemicals 26 Construction, Infrastructure & Real Estate 28 Food, Beverage & Tobacco 30 Industrial & Manufacturing 32 Metals & Mining 34 Oil & Gas 36 Pharmaceuticals & Biotechnology 38 Retail, Consumer Discretionary & Consumer Staples 40 Technology & Communications 42 Utilities 44 Appendix: Target sample, voluntary responders 46 3
CDP Water Disclosure Foreword Paul Dickinson, Executive Chairman Carbon Disclosure Project Demand for water is projected to outstrip supply by a staggering 40 percent by 2030, and an estimated half the world’s population are likely to live in areas of high water stress by the same year. The impacts on water resources of population growth, rising per capita demand and climate change are already being felt, albeit unevenly across different sectors and geographies. These impacts will increasingly present risks from physical disruptions to operations and supply chains, changing regulatory regimes and reputational damage from misuse, or perceived misuse, of this shared, life-sustaining resource. But the changing availability of water resources will also present opportunities to business through demand for new infrastructure, products and services. Now is the time to start seizing these opportunities, addressing water challenges and building resilience – not once the well has run dry. So is water the new carbon? In the sense that water presents an equally pressing challenge to the long term sustainability of business, yes it is, and the need for greater transparency and access to high quality information to inform and improve decision making is just as vital. As companies have repeatedly demonstrated with carbon, what they measure they manage. Thinking about challenges in a strategic way will enable them to mitigate risks and identify opportunities, putting companies in a far stronger position to navigate a water-constrained world than would otherwise be the case. In other respects water is very different from carbon. Whereas sustainable alternatives to carbon do exist, for water there is no substitute. The challenge therefore lies in managing what we have among competing users, be they businesses, communities or ecosystems. Those competing users or “rivals” (from the Latin for a neighbour who shares a stream) are linked by the geography and politics of their local water systems, making water a local rather than a global management issue, even if its impacts can be felt across the world through the displacement of populations and higher commodity prices. CDP Water Disclosure’s goal is to make meaningful, systematic and comparable reporting on water a standard corporate practice globally, enabling investors, companies themselves, governments and other stakeholders to put this data at the heart of their decision making. More immediately, we seek to raise awareness and enhance understanding of water-related issues, and this excellent report by Environmental Resources Management (ERM) Ltd should do just that. We are also delighted to be working with our two lead sponsors, Molson Coors and Norges Bank Investment Management (NBIM) and with our project sponsor, Irbaris, and we wholeheartedly applaud all 175 companies at the vanguard of water disclosure that reported through us in our inaugural year. Paul Dickinson Executive Chairman, Carbon Disclosure Project 4
Executive summary Introduction Highlights from do so for their supply chains. Sectors 2010 disclosures reporting the greatest exposure to water CDP Water Disclosure replicates risks are Food, Beverage & Tobacco and builds on the tried-and-trusted The response rate among target and Metals & Mining, while Chemicals methodology and process that the companies has been impressive for the and Technology & Communications Carbon Disclosure Project (CDP) has program’s first year. Of the 302 target report the least. There is a clear used for carbon and climate change companies, 150 (50%) responded opportunity for improvement and since 2003. Backed by 137 institutional to the questionnaire. A further focused attention on supply chains in investors representing $16 trillion in 25 companies also responded the coming years. assets, this year CDP sent its first on a purely voluntary basis2. annual water questionnaire to 302 of The strong response rate in this Water is a current, not a future, the world’s 500 largest companies in inaugural year is indicative of the high corporate issue. The immediacy the FTSE Global Equity Index Series, level of importance being placed on of water as a corporate issue was focusing on sectors that are water water by global corporations across highlighted by the timescales associated intensive or are particularly exposed sectors and geographies. with water-related risks, with more to water-related risks. than half of the risks identified across Water has climbed high on the all categories (physical, regulatory and Although water issues are as unique corporate agenda. 67% of responding ‘other’) being classified as either current and varied as their local context, companies report that responsibility or near-term (1-5 years), and 39% of the overarching concern of water for water-related issues lies at the companies already having experienced management is access: whether the Board or Executive Committee level, detrimental impacts. These impacts fall appropriate quantity and quality of while 89% have developed specific into the broad categories of disruption water is available for competing human water policies, strategies, and plans. to operations from drought or flooding users and for environmental health Encouragingly, 60% have set water- (in one case resulting in $100 million both now and in the future. The CDP related performance targets. in remediation costs), declining water Water Disclosure questionnaire brings quality necessitating costly on-site insight into the challenges that this Response rates vary widely pre-treatment, increases in water presents to companies by requesting between different sectors and prices, and fines and litigation relating information on their water strategies geographies. 100% of companies in to pollution incidents. and management plans, on their water- the Chemicals sector responded related risks and opportunities, and on compared with just 29% in the Oil & Corporations are identifying their water use within the context of Gas and Construction, Infrastructure & a wide range of water-related local scarcity or abundance. Real Estate sectors. Responses were opportunities. Even in this early received from companies in a total of 25 phase of water reporting, 62% of This report1, prepared by countries, with the highest number of respondents identify significant water- Environmental Resources Management responses coming from the US (59, 57% related business opportunities. Widely Ltd (ERM) analyses the responses responding), the UK (14, 64% responding) cited examples include improved to the CDP Water Disclosure 2010 and Japan (13, 45% responding), and water management practices leading questionnaire. Throughout this report, the highest response rates from South to reduced operating costs (e.g. for response rates reflect the full number Africa (100%), Germany (83%), and mines and industrial and manufacturing of responders while all other statistics Switzerland (71%). processes), increasing urbanization include only those companies that and population growth expanding the have chosen to make their responses Respondents have a good overall market for water treatment chemicals publicly available. These responses are awareness of water risks and water (particularly in Asia), and a growing available to view at www.cdproject.net. usage within their own operations, demand for water infrastructure to but much less knowledge of their support growing populations and to 1. Please see the Important Notice on the inside back cover supply chains. 96% of responding adapt to climate change (e.g. flood of this report regarding its content and use. companies were able to identify whether defense and stormwater systems). 2. The statistics reported only include responses from the 302 targeted companies in order to ensure that subsequent reports compare a similar dataset. Best their own operations are exposed to practice and other elements of the report also draw on the water risks while just 53% were able to 25 purely voluntary responses received from companies outside the target 302 who are listed in the Appendix. 5
CDP Water Disclosure This report does not rank or score companies either on the quality of their Molson Coors Brewing Company commentary disclosures or on their performance in Peter Swinburn, President & CEO water management. However, it does contain numerous examples of best practice from a wide range of companies, notably from the likes of Plentiful, fresh water is what brought John Molson to the banks of the Anglo American, Colgate-Palmolive, St. Lawrence River in Montreal, Adolph Coors to Clear Creek in Golden, Ford Motor, General Electric, Colorado, and it was the waters beneath Burton-on-Trent that gave birth to PG&E and Taiwan Semiconductor the British brewing industry we know today. Water is the #1 ingredient in beer Manufacturing. These companies, and the quality of our beer is tied directly to the quality of the water we use to produce it. Ensuring fresh water as a sustainable resource is not just part of and many others, have recognized our heritage, it also plays a vital role in our future. the critical nature of water to their business and are taking steps on As a global brewer with over 350 years of experience developing and the journey towards sustainable implementing real-world solutions for water use and conservation, we have water management. learned that solutions to global water issues are often locally based and require individuals, non-profit organizations, and corporations to engage and collaborate in their watersheds and communities. We have also learned that transparency must serve as the cornerstone for stimulating integrated watershed resource management. Although many companies have increased their knowledge and transparency around operational water use, many still have work to do with respect to water usage across supply chains. At the same time, the cost savings and risk mitigation opportunities inherent in closer evaluation of water use is contributing to even greater focus and action. We are encouraged that CDP Water Disclosure has received such a strong response from companies in its inaugural year. This is an indication of the growing importance that companies and their investors are placing on water issues. As we enter a new era of increased expectations around water management and reporting, the growing interest that is building behind CDP’s efforts is a valuable signal that we are moving collectively in the right direction. Working with CDP on this issue is a logical next step for corporations that are committed to clean water and water sustainability. It’s clear that collaboration and progress require working from the same, reliable information and CDP Water Disclosure is perfectly positioned to normalize best practice and mediate between investors and companies in valuing risks and opportunities. As we move forward, companies must accept the responsibility for their own transparency and join in this effort to help advance what will hopefully emerge as a common water reporting standard benefiting all stakeholders. On behalf of Molson Coors, I want to congratulate CDP Water Disclosure on a very successful first year. We look forward to exploring new opportunities to encourage and support this critical initiative on behalf of the key stakeholders that have a vested interest in the continued success of companies like ours, as well as the various communities where we operate globally. 6
Executive summary “As both the world Norges Bank Investment Management (NBIM) commentary population and the Anne Kvam, Global Head of Ownership Strategies demand for clean water are increasing, water NBIM is responsible for investing the assets of the Norwegian Government availability is decreasing Pension Fund Global. NBIM uses its ownership rights to safeguard the fund’s assets by promoting good corporate governance and high social and in some locations around environmental standards at companies it invests in. the world. For its part, As a diversified investor with a long-term outlook and investments in a range Colgate strives to use of sectors at risk from increasingly scarce water resources, we take water management seriously. Companies that fail to consider the impact of water this natural resource scarcity and other water-related risks pose a financial risk to investments. more efficiently and has As lead partner in CDP Water Disclosure and with water management as established water-related one of our strategic focus areas, NBIM is very pleased with the outcome of the project’s first questionnaire. The strong response rate suggests that goals to ensure we do so. companies recognise water is a critical issue that needs to be dealt with promptly and adequately. It also indicates that companies understand the Our strategy is company- importance of disclosing and reporting on their water management. wide and applies to all Also encouraging is that many companies see water as a significant area of opportunity. manufacturing and R&D sites around the world.” As expected, many companies have a good awareness of water-related risks in their own operations, but considerably less knowledge about risks in their supply chains. We hope this report will encourage companies to focus more on water management in the supply chain. Sustainable water management is Colgate-Palmolive vital for the long-term performance of companies. Irbaris LLP commentary David Hampton, Managing Partner Disclosure of environmental risks and opportunities is increasingly important to many stakeholders and it is exciting to see the high level of response to the CDP’s inaugural Water Disclosure questionnaire, especially given how events in the past 12 months have demonstrated the devastating social and economic effects of both too much and too little water. As is made clear in throughout this report, water issues are already creating challenges and opportunities for many businesses. One critical role for disclosure is as a catalyst for change. Corporate actions on water are required on two levels. Clearly, companies should be taking steps to reduce water usage and water-related risks along their supply chain. They also need to consider how the (future) water constrained world could look and what it could mean for customers, suppliers and communities in which the company operates. Water disclosure is at an early stage and, although rapid progress is being made, much still needs to be done. We fully expect that CDP Water Disclosure will become an essential source of information and insight for internal and external stakeholders to help catalyze companies to take the necessary actions. 7
Corporate water sustainability in context “Typically water is a get In November 2009, CDP published In addition, there has been a recent the results of a Water Disclosure Pilot focus on the notion and formalization into business and/or stay that was undertaken as part of CDP of water rights, evidenced by the in business requirement. Supply Chain in 2008. The report declaration in July 2010 by the United noted the growing issue of water Nations General Assembly that clean The mining industry is scarcity, and highlighted the limited water and sanitation are a fundamental dependent on water, and business awareness of the issues, human right. The declaration received risks and opportunities associated a large amount of publicity and has water is a finite resource. with water. Only half of the respondents increased the salience of water access With water scarcity viewed water as a significant risk for as an international political issue, their business or their supply chain, illustrated by the Stockholm Statement scenarios a looming threat, and the majority of companies focused that emerged from World Water Week, the identified opportunities largely on water management issues and discussions around water in the in their own facilities. context of funding for climate change will enable Anglo Platinum adaptation in advance of COP16 in to continue with business- Since the 2008 Pilot, the focus on Cancun at the end of November 2010. corporate water management has as-usual and enable long- been strengthened in a range of ways. There is also growing evidence of term expansion plans.” Firstly, in the last six to nine months broader corporate understanding there have been a number of water- of the water issue in terms of the related incidents that have served to formalization of the link between Anglo Platinum move the issue up the agenda. The water and energy (or the “water- major floods in China and Pakistan energy nexus”). The increasing focus have together resulted in almost on “unconventional petroleum” sources $100 billion in damage to date. such as oil shales, tar sands and coal Shares in the Zijin Mining Group were seam gas, which require significant suspended from trading on the Hong water inputs during extraction and Kong stock exchange on October production and can also lead to the 4th 2010 in advance of disclosure discharge of significantly polluted of the penalties and clean-up costs wastewaters, is a case in point. associated with the 2.4 million gallon Global Water Intelligence for example acid spill into the Ting river in July estimated that it takes 11 barrels 2010. The Ajka aluminium waste spill of water to transport and separate in Hungary has now reached the each barrel of bitumen from Canadian Danube, having extinguished all life tar sands2. from the Marcal river. Widespread drought conditions in China, Argentina, Russia and New Zealand have hurt profits in the agricultural and hydroelectric sectors. The business impacts of water issues are becoming increasingly evident. 1. The statement urged the high-level Plenary Meeting on the Millennium Development Goals to “act upon the fundamental roles of water resources, drinking water, sanitation and water for all” Stockholm International Water Institute, 2010. http://www.siwi.org/sa/node. asp?node=1044 2. Global Water Intelligence, 21st January 2010. www. globalwaterintel.com/insight/how-can-we-meet-oils- growing-demand-water.html). 8
Corporate water sustainability in context The response of the corporate sector The concept of water footprinting “Climate Change and to these various developments has emerged in the early 2000’s from the been varied, as demonstrated by work of Arjen Hoekstra at UNESCO- global warming could the 2010 CDP Water Disclosure IHE and has been the subject of reduce snow pack and responses, but it generally recognizes much discussion from a corporate the increasing importance that perspective. While there have been runoff volumes needed water plays in an organization’s controversies over the specifics of the to support Hydro electric “license to operate”, particularly process, the establishment of an ISO in areas that are water-stressed working group for the development generation. This, in turn, or that are likely to become of a water footprinting standard may is likely to raise the cost so. Widespread business support herald progress. This working group for the various corporate water seeks to establish a methodology of energy production. initiatives that have emerged in the which will allow users to understand Those costs could have recent past is a clear indicator of this the water process more fully, growing corporate interest in current identify the reduction “pressure a direct impact on the approaches to water sustainability. points” within the process, and financial bottom line for The work of organizations such as ensure the comparability and the CEO Water Mandate, the Alliance accuracy of the footprints. the company.” for Water Stewardship, and the newly upgraded WBCSD Water Project are Whilst progress in water accounting/ helping to place business at the centre water footprinting has been uneven, Air Products and of the global response to the problem a concept that has received significant Chemicals of water scarcity. The corporate growing support within the last year response to water management has is that of “water stewardship”. The also led to the emergence of more water stewardship concept seeks to in-depth methodologies for measuring broaden the focus of corporate and understanding organizational water sustainability away from water use. simply quantifying water use volumes, to the active promotion Businesses are increasingly realizing of responsible water usage. that it is no longer sufficient to simply Championed globally by the Alliance gather and report on water usage and for Water Stewardship the concept discharge volumes, but that there is an is aimed at creating “a program that additional need to further characterize recognizes and rewards water users this water usage, by understanding and managers who take major steps both the geography of usage, the to minimize the impacts of their water nature of water sources and the scale use and management”. of overall impacts resulting from abstraction and discharge. This is The Carbon Disclosure Project’s most comprehensively achieved launch of CDP Water Disclosure through the process of water marks another significant milestone footprinting, which allows a towards improved corporate water comprehensive assessment of management. The program is building water usage across a company’s on an extremely effective blueprint, operations within a defined scope. and the high level of engagement from companies in this inaugural year suggests that it is well placed to serve as a driver for improved water measurement and management and the global dissemination of best practice relating to water, and to provide a reservoir of data and knowledge to inform decision making by investors, companies, governments and other stakeholders in the coming years. 9
Sector overview “Industries need clean, Introduction In addition, 25 companies from outside the target sample responded abundant, secure, and There has been an impressive on a purely voluntary basis. These competitively priced response to the program’s first companies are not included in the questionnaire, with 150 (50%) of the statistical analysis but examples sources of water and target sample of 302 companies of best practice and other elements have a responsibility to responding. Of these, a very of the report draw on their responses. creditable 122 (81%) chose to make the public debate on their responses publicly available. Sector response rates water policies that Throughout this report, response rates reflect the full number of responders A sector-by-sector comparison affect industries.” while all other statistics include only provides an insight into the particular those companies that have chosen to challenges and opportunities each make their responses publicly available. sector faces and the extent to which Caterpillar they are taking action. Certainly, response rates varied widely across sectors, with the rates for Chemicals Fig. 1: Number of responding companies and response rates by sector (100%) and Pharmaceuticals & Biotech (81%) in stark contrast to those for Chemicals Oil & Gas (29%) and Construction, Infrastructure & Real Estate (29%). 10 (100%) Given the importance of water to these Construction, Infrastructure & Real Estate sectors, and their potential impacts on 6 (29%) water supplies, a greater commitment to reporting would be desirable. Food, Beverage & Tobacco 15 (63%) Industrial & Manufacturing 23 (49%) Metals & Mining 16 (59%) Oil & Gas 15 (29%) Pharmaceuticals & Biotechnology 17 (81%) Retail, Consumer Discretionary & Consumer Staples 17 (49%) Technology & Communications 17 (59%) Utilities 14 (39%) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentage response rates 10
Sector overview Water targets and goals The number of companies reporting “Our goal is to reduce our absolute targets for water reduction Water is already high on the corporate or water efficiency targets is notable. Group freshwater use per agenda with 67% of respondents Slightly more companies reported tonne of product by six reporting responsibility for water- absolute targets (36) than efficiency related issues at the board or executive targets (33), which is encouraging per cent by 2013 from committee level, and 89% already given that the former are generally a 2008 baseline.” having developed water policies, more onerous and are considered best strategies or plans. Encouragingly, 60% practice, particularly in water-stressed of respondents disclosed concrete regions. In many cases companies Rio Tinto performance goals - which are essential reported both absolute and efficiency to improving water management - for a targets, which is why for sectors range of indicators including reductions such as Food, Beverage & Tobacco in use, quality of discharges, sustainability the combined number of companies of supply (including river management), reporting these targets (14) in Figure provision of safe drinking water to 3 exceeds the number of companies local communities and community reporting any target (12) in Figure 2. engagement. As illustrated in Figure 2, Food, Beverage & Tobacco (100%) “In 2009, GE’s water use was 10.7 are clear leaders while Oil & Gas (8%) billion gallons, a 30% reduction perform particularly poorly. from 2006.” General Electric Fig. 2: Number of companies setting Fig. 3: Number of companies setting absolute reduction any water-related target and efficiency targets Chemicals Chemicals 4 (50%) 4 (50%) 2 1 Construction, Infrastructure & Real Estate Construction, Infrastructure & Real Estate 3 (50%) 3 (50%) 2 1 Food, Beverage & Tobacco Food, Beverage & Tobacco 12 (100%) 5 9 Industrial & Manufacturing Industrial & Manufacturing 11 (79%) 3 (21%) 6 4 Metals & Mining Metals & Mining 6 (43%) 8 (57%) 1 6 Oil & Gas Oil & Gas 1 (8%) 11 (92%) 1 Pharmaceuticals & Biotechnology Pharmaceuticals & Biotechnology 11 (79%) 3 (21%) 4 3 Retail, Consumer Discretionary & Consumer Staples Retail, Consumer Discretionary & Consumer Staples 9 (56%) 7 (46%) 5 5 Technology & Communications Technology & Communications 11 (85%) 2 (15%) 6 3 Utilities Utilities 5 (38%) 8 (62%) 4 1 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Percentage response rates Total ■ Specific target reported (73) ■ Absolute target (36) ■ No specific target reorted (49) ■ Efficiency target (33) 11
CDP Water Disclosure “Recent investments Exposure of companies’ own Identification of risks in own have had to be made to operations to water stress operations and supply chains improve water security Overall, an impressive 88% of Companies face numerous water- related risks and for the purposes following a water supply companies are able to identify which of the questionnaire they are broken of their operations are located in water- shortfall identified in 2004 stressed areas, signaling a high degree down into three categories: for the Sasol Secunda of awareness of the significance of • ‘physical risks’ including water to continuing operations. Retail, Operations in South Consumer Discretionary & Consumer exposure to water stress, flooding and pollution; Africa. A R2.7billion Staples (63%) scored notably less than • ‘regulatory risks’ including average and would be advised to Vaal River Eastern Sub- map the exposure of their sites to higher tariffs, the redistribution of water rights and more stringent system (VRESAP) pipeline water stress. regulations governing water quality; project, in which Sasol and • ‘other risks’ including reputational has a 40% share, has risk (harming the corporate brand), been commissioned and infrastructure risk (disrupting operations), and product risk (felt will provide an additional through decreased demand for reliable supply of water water-intensive products). from the Vaal Dam to both the Sasol Secunda Fig. 4: Companies able to identify whether their own operations are located in water-stressed regions operations and for use by the electricity Chemicals utility Eskom.” 7 (88%) 1 (12%) Construction, Infrastructure & Real Estate Sasol 5 (83%) 1 (17%) Food, Beverage & Tobacco 12 (100%) “Motorola conducts routine risk assessments to Industrial & Manufacturing 13 (93%) 1 (7%) identify high-risk situations that could adversely affect Metals & Mining 13 (93%) 1 (7%) our operations. Our crisis Oil & Gas teams have developed 10 (83%) 2 (17%) preparedness plans to Pharmaceuticals & Biotechnology ensure that our response 14 (100%) will be effective and our Retail, Consumer Discretionary & Consumer Staples recovery swift.” 10 (63.5%) 6 (37.5%) Technology & Communications Motorola 11 (85%) 2 (15%) Utilities 12 (92%) 1 (8%) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ■ Yes ■ No Percentage response rates 12
Sector overview In general, respondents reported a Fig. 5: Risks reported for own operations and supply chains good awareness of the water-related risks to their own operations, with 16 12 8 4 0 4 8 12 16 just 4% unable to identify whether Own Operations Supply Chain they are or are not subject to such Chemicals risk. Companies in Food, Beverage & A 2 4 2 3 5 A Tobacco (81%) and Metals & Mining B 2 4 2 3 5 B (81%) were most likely to report C 2 4 2 3 5 C exposure to physical risks, while those Construction Infrastructure & real Estate in Chemicals (20%) and Technology 3 3 3 2 1 & Communications (31%) were least 3 3 3 2 1 likely to. Similar patterns were also 4 2 2 3 1 Food, Beverage & Tobacco exhibited for regulatory and other risks. 2 10 10 2 5 7 7 7 2 3 Perhaps unsurprisingly given its 5 7 5 2 5 newness as an area of management Industrial & Manufacturing focus, 47% of respondents were 6 8 6 4 4 unable to identify whether their supply 8 6 5 5 4 chains are subject to water-related risk. 10 4 3 6 5 For many sectors, including all those Metals & Mining 2 12 7 2 5 connected with agriculture, supply 4 10 5 9 chains are central to understanding 9 5 2 3 9 and managing water risk. Such risk Oil & Gas can be mitigated through risk mapping 8 4 2 5 5 and assisting and encouraging 7 5 2 4 6 suppliers to reduce their own 6 6 2 5 5 water footprints, but according to Pharmaceuticals & Biotechnology disclosures, such practice is not yet 9 5 6 5 3 commonplace. Companies would be 8 6 5 5 4 7 7 5 4 5 well advised to remedy this. Retail, Consumer Discretionary & Consumer Staples 3 8 5 6 1 9 “To grow our business sustainably 2 10 4 3 4 9 we need to reduce the total amount 4 11 1 3 2 11 of water used across our value chain, Technology & Communications especially in regions where water 9 4 2 4 7 availability is already under pressure 11 2 2 4 7 from climate change.” 10 3 1 4 8 Utilities Unilever 7 6 1 4 8 7 6 1 3 9 9 4 1 3 9 16 12 8 4 0 4 8 12 16 Yes No Don’t know A: Physical B: Regulatory C: Other 13
CDP Water Disclosure “We promote water Water withdrawals, While one respondent repudiated reuse and recycling the mantra “you can’t manage conservation with our what you don’t measure”, accurate suppliers. We routinely While 86% of respondents disclosed measurement allows the methodical the total volume of water that they identification and implementation ask suppliers about their of water-saving methods, as well as withdraw, only 64% provided a conservation programmes breakdown of this figure (giving it either the accurate tracking and reporting geographical or organizational context), of progress, and should sensibly when we issue requests for form an integral part of all water and only 42% provided a figure for proposal, as well as their recycling and reuse. Overall, Metals management programs. overall environmental, safety & Mining had the highest reporting rate and Utilities and Oil & Gas the and health performance.” lowest. Clearly, there is still work to do in terms of reporting basic water metrics, though part of the problem AEP unquestionably lies with the lack of a standard measuring and reporting methodology. Fig. 6: Proportion of companies reporting figures for withdrawals and reuse /recycling Provided figure for total Withdrawal figure broken Provided figure for withdrawal down by geography etc. recycling/reuse Chemicals 88% 88% 38% Construction, Infrastructure & 100% 100% 33% Real Estate Food, Beverage & Tobacco 92% 58% 33% Industrial & Manufacturing 93% 64% 36% Metals & Mining 100% 86% 79% Oil & Gas 50% 42% 33% Pharmaceuticals & 100% 71% 50% Biotechnology Retail, Consumer Discretionary & Consumer 81% 63% 25% Staples Technology & 100% 69% 58% Communications Utilities 62% 23% 23% Totals 86% 64% 42% 14
Sector overview Detrimental impacts from treatment, increases in water prices, “Extreme weather events water already suffered and fines and litigation relating to pollution incidents. such as hurricanes or Water is not just a concern for the flooding can … require a future but is quite clearly a current The immediacy of water as a corporate issue which is biting companies issue was further highlighted by the shut-down of our plants or already. A highly significant proportion timescales associated with water- hamper normal operations. of respondents (39%) report that they related risks, with more than half of the have suffered detrimental impacts from risks identified across all categories This is associated with water in the past five years, with Metals (physical, regulatory and other) being production losses, not & Mining (64%), Utilities (62%) and classified as either current or near-term Chemicals (50%) worst affected. (1-5 years). only in terms of production These detrimental impacts fall into being temporarily stopped, the broad categories of disruption to operations from drought or flooding but also in terms of the (in one case resulting in $100 million transport of raw materials in remediation costs), declining water quality necessitating costly on-site pre- and products by ship.” BASF Fig. 7: Companies reporting having suffered detrimental impacts from water Chemicals 4 (50%) 4 (50%) Construction, Infrastructure & Real Estate 6 (100%) Food, Beverage & Tobacco 5 (42%) 7 (58%) Industrial & Manufacturing 6 (43%) 8 (57%) Metals & Mining 9 (64%) 5 (36%) Oil & Gas 5 (42%) 7 (58%) Pharmaceuticals & Biotechnology 6 (43%) 8 (57%) Retail, Consumer Discretionary & Consumer Staples 6 (40%) 9 (60%) Technology & Communications 3 (23%) 10 (77%) Utilities 8 (62%) 5 (38%) Total 47 (39%) 75 (61%) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ■ Yes ■ No Percentage response rates 15
CDP Water Disclosure “Air Liquide has developed Fig. 8: Companies identifying water as an opportunity several solutions for water treatment in the Chemicals 7 (88%) 1 (12%) fields such as gas to liquid transfer, activated sludge Construction, Infrastructure & Real Estate 5 (83%) 1 (17%) oxygenation of oxidation Food, Beverage & Tobacco processes. Water 8 (67%) 1 (8%) 3 (25%) treatment is getting more Industrial & Manufacturing and more important.” 12 (86%) 2 (14%) Metals & Mining Air Liquide 13 (93%) 1 (7%) Oil & Gas 5 (42%) 5 (42%) 2 (16%) Pharmaceuticals & Biotechnology 5 (36%) 9 (64%) Retail, Consumer Discretionary & Consumer Staples 8 (50%) 6 (38%) 2 (13%) Technology & Communications 7 (54%) 5 (38%) 1 (8%) Utilities 6 (46%) 7 (54%) Total 76 (62%) Percentage response rates 37 (30%) 9 (7%) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ■ Yes ■ No ■ Don’t know Percentage response rates Water as an opportunity water infrastructure to support growing and retain top talent as a result of populations and to adapt to climate reputational strength, and these are Perhaps the most encouraging theme change (e.g. flood defense and likely to become more pronounced as arising from the disclosures is that stormwater systems). water challenges intensify. 62% of respondents already recognize the opportunities that water presents. While the financial savings from better Recognition of the Sectors reporting the greatest water management may be dwarfed by revenues, they impact directly on energy-water nexus opportunities are Metals & Mining (93%), Chemicals (88%), and Industrial a company’s bottom line and can thus be a powerful lever for improving It is also encouraging that 72% of & Manufacturing (86%). Examples profitability. Companies’ appreciation respondents, including at least 50% include improved water management of this may have arisen from their respondents from each sector, have practices leading to reduced operating experience with carbon management identified linkages and tradeoffs costs (e.g. for mines and industrial and or from a more general appreciation in their management of water and manufacturing processes), increasing of the business case for sustainability. energy. Reductions in the use of urbanization and population growth Companies are already seeing a water often – but not always – result expanding the market for water range of benefits from stronger in reductions in the use of energy. treatment chemicals (particularly in balance sheets to the ability to attract The widespread recognition of this Asia), and a growing demand for 16
Sector overview fact stands companies in good stead “We fully understand the linkage “Devon is constantly as they construct resource efficiency between water and energy. As a power management plans that reflect the generator, AEP uses large quantities reminded and aware of the interdependence of various inputs, of water to produce electricity. New fact that there is a close and the opportunities for savings in technologies being developed, such as multiple areas through single projects. carbon capture and storage, will also linkage between energy require large amounts of water. These production and water. “Climate change and energy are are issues we will have to address.” inextricably linked. Water issues American Electric Power Company Our business economics must be framed in the wider context, and production potential including issues of material efficiency; availability of safe, clean water are often interrelated to and sanitation; reducing travel and the volume of produced transport; supply chain accountability; healthcare innovation; and fluids that ultimately must infrastructure improvement.” be disposed of. If our Astra Zeneca ratio of produced water to energy yielded begins to increase, operating costs Fig. 9: Companies identifying linkages between the management of water and energy may increase to a point in which a well may become Chemicals uneconomic to produce.” 6 (75%) 1 (12.5%) 1 (12.5%) Construction, Infrastructure & Real Estate Devon Energy 3 (50%) 3 (50%) Corporation Food, Beverage & Tobacco 9 (75%) 3 (25%) Industrial & Manufacturing 11 (79%) 3 (21%) Metals & Mining 10 (71%) 4 (29%) Oil & Gas 8 (67%) 4 (33%) Pharmaceuticals & Biotechnology 12 (86%) 2 (14%) Retail, Consumer Discretionary & Consumer Staples 9 (56%) 5 (31%) 2 (13%) Technology & Communications 11 (85%) 2 (15%) Utilities 9 (69%) 4 (31%) Total 88 (72%) Percentage response rates 31 (26%) 3 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ■ Yes ■ No ■ Don’t know Percentage response rates 17
CDP Water Disclosure Geographical overview The target sample comprises 302 Fig. 10: Number of responding companies and response rates by country companies from a total of 34 countries with responses received from 25 of these. There is a heavy weighting US 59 (57%) towards the US which accounts for UK 35% of the total sample and 39% of 14 (64%) the responses received, with 59 Japan responses and a 57% response rate. 13 (45%) The next best represented countries Germany 10 (83%) are the UK with 14 responses (a 64% Canada response rate), Japan with 13 (a 45% 8 (62%) response rate) and Germany with 10 France (an 83% response rate). All South 7 (37%) African companies in the target sample Switzerland 5 (71%) responded, with Germany (83%) and Australia Switzerland (71%) also achieving 4 (66%) particularly strong response rates. Brazil 3 (50%) The nine countries with companies China 3 (16%) included in the target sample from India which there were no responders are 3 (38%) Chile, Czech Republic, Malaysia, Italy Mexico, Norway, Poland, Russia, 3 (60%) Singapore and Thailand. South Africa 3 (100%) Spain 3 (38%) Netherlands 2 (40%) Belgium 1 (100%) Bermuda 1 (100%) Colombia 1 (100%) Denmark 1 (100%) Finland 1 (50%) Ireland 1 (100%) Israel 1 (50%) Portugal 1 (50%) South Korea 1 (25%) Sweden 1 (50%) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentage response rates 18
Geographical overview Figure 11 highlights key statistics on the that their own operations are exposed management of water and exposure to water risk. South African and UK to risk for each country represented by companies lead in setting performance more than one public respondent. It targets and in their ability to identify focuses on the number of respondents, whether their operations are located in the proportion that has set targets, the water stressed regions. Interestingly, proportion able to identify whether their companies from these two countries and operations are located in water scarce India were most likely to report water- regions, and the proportion reporting related risks to their operations. Fig. 11: Key facts by geography Canada 7 0% 100% 48% USA Germany 50 60 % 80% 35% 7 57% 100% 43% United Kingdom 13 85% 100% 64% France 5 80% 80% 7% Japan Spain 7 57% 100% 52% 3 66% 100% 56% Switzerland China 5 40% 100% 33% 2 50% 100% 67% Italy 2 0% 50% 17% India 3 67% 67% 67% Brazil 3 50% 100% 50% South Africa 3 100% 100% 78% Australia 4 50% 100% 50% Key A B C D A Number of public respondents B Percentage setting efficiency or quality targets C Percentage able to identify whether their own operations are located in water stressed areas D Percentage identifying risks to their own operations (average of physical, regulatory and other risks) 19
CDP Water Disclosure South Africa focus South Africa’s available freshwater The country’s total renewable water How exposed is South Africa to resources are already almost fully- resource is 1,048 m3 per person or climate change? utilized and under stress. At current about 13% of the global average of projected population growth and 8,210 m3 per person. A country is Although the overall impact of climate economic development rates, it is said to experience “water stress” when change on water resources is uncertain unlikely that the growth in demand for annual water supplies drop below and will vary significantly from region to water resources in South Africa can 1,700 m3 per person. When this level region, evidence suggests that average continue to be met. Water thus has falls to between 1,700 and 1,000 m3 temperatures in South Africa will rise the potential to become the limiting per person, periodic or limited water and rainfall patterns will change. resource to the country’s economic shortages can be expected. When These changes are likely to result development. This section examines annual water supplies drop below in greater evaporative losses from South Africa’s water resources, how 1,000 m3 per person, the country dams and soils, and a greater risk of they might be affected by climate faces water scarcity. Coupled with algal blooms. Reduced freshwater change, the legislative context, and this, South Africa uses about 25% of flow in rivers will also reduce the how business in South Africa is its renewable freshwater resources size of estuaries and be harmful to beginning to respond to the challenge. per annum, with use in excess of 10% their ecosystems (and therefore the typically seen as a cause of water populations that rely on them), and Water in context – how does stress in a given locality. will reduce the dilution of wastewater South Africa fit into the global discharged into rivers. This, in turn, will water picture? Water resources are amalgamated into increase the already intense pollution in 19 Water Management Areas (WMAs) the coastal zone. South Africa is an arid country with across the country. A significant only 8.6% of annual rainfall becoming amount of water is transferred between Recent studies have shown that South available as surface water, one of the these WMAs and also from South Africa could face a water supply gap lowest conversion ratios in the world. Africa’s neighbors. Inter-Basin Transfer of between 17% and 25% by 2030 This runoff is unevenly distributed (IBT) of water has long been seen as assuming that water withdrawal for both geographically and over time, the solution to water scarcity in South irrigation does not increase. South with great annual variability in rainfall. Africa, and of the nine provinces African agriculture and municipal South Africa’s groundwater resources whose water supplies are bolstered by water supplies are highly dependent are also relatively limited compared to transfers, eight are reliant on IBT for on rainfall, but current models indicate global averages. more than 50% of their annual supply. that climate change will lead to lower It has been reported that Gauteng average rainfall and a reduction in This water scarcity and unpredictability Province, which supports around water availability of approximately 10%. is compounded by the pollution of 25% of South Africa’s population Given the importance of South Africa’s surface- and ground-water resources and generates around 10% of the agricultural sector to food security by industrial effluents, domestic economic output of the entire African in Southern Africa, any reduction in and commercial sewage, acid mine continent, is 100% reliant on IBT for its rainfall could have serious implications drainage, agricultural runoff, and litter. water supply. for the region. South Africa is clearly highly sensitive to climate change South Africa is looking to other impacts, and management of the countries such as Lesotho to help existing supply will be key to mitigating meet its projected demand for the impacts of rising temperatures. 1. The Market as a Driver or Constraint in the Move Towards Renewable Energy in Southern Africa, Touchstone water, though there are clearly risks Resources, July 2009. associated with dependence on extra- 2. Inland Water: Background Research Paper produced for the South Africa Environment Outlook report on behalf of territorial supply of arguably the key the Department of 3. Environmental Affairs and Tourism, SRK Consulting, national resource. October 2005. 4. Nedbank Sustainability Outlook, Edition 1, Nedbank, August/September 2010. 5. The Market as a Driver or Constraint in the Move Towards Renewable Energy in Southern Africa, Touchstone Resources, July 2009. 20
South Africa focus What is the legislative framework The following companies either register themselves as South African around water in South Africa? in the response, or are listed on the Johannesburg Stock Exchange: Since 1994, there has been significant progress in the development of South Companies from target sample Volunteers African policy and legal frameworks regarding water resources. The National Water Act stipulates that Anglo American Eskom the government is the trustee of the Anglo Platinum Exxaro Resources nation’s water resources and that AngloGold Ashanti Impala Platinum it must act in the public interest to ensure that water is “protected, British American Tobacco Nedbank used, developed, conserved, SABMiller Northam Platinum managed and controlled in a Sasol Woolworths Holdings sustainable and equitable manner for the benefit of all persons”. It also recognizes the limits to the proposed All eight publicly responding companies This vulnerability is further reflected by solutions of constructing new dams (shown in blue above) reported that the fact that all but one company (88%) and increasing water transfer, their own operations are susceptible reported having suffered a detrimental and strongly advocates demand to significant physical risks (compared impact from water in the last five management approaches. Finally, the to 48% of global respondents). Six years (compared to 39% globally). act makes a provision for a “reserve” (75%) also reported significant physical These impacts include flooding, water of water “to protect the ecological risks to their supply chain (compared to shortages leading to power cuts and functioning of aquatic ecosystems 35% of global respondents), illustrating interruptions to supplies of key inputs. before water uses such as industry that the vulnerability is widespread and or agriculture can be authorized”. acknowledged by procuring companies. South Africa’s main approach to addressing water issues is Risks Identified one of integrated water resource 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% management. A key principle of this Physical Risk (Own Operations) is the need to balance protection 8 of water resources with social and economic development, and the only Regulatory Risk (Own Operations) two guaranteed entitlements to water 6 2 are for the ecological reserve and to Other Risk (Own Operations) meet basic human needs. 5 3 South African companies’ Physical Risk (Supply Chain) responses to CDP Water 6 1 1 Disclosure Regulatory Risk (Supply Chain) The South African response to CDP 5 2 1 Water Disclosure has been extremely Other Risk (Supply Chain) positive, with all six of the 302 target 3 4 1 companies listed on the Johannesburg Stock Exchange submitting responses, ■ Yes ■ No ■ Don’t know and a further six South African companies responding on a purely voluntary basis. The fact that almost a quarter of all voluntary submissions have come from South Africa indicates how seriously the issue is felt. Of these 12 companies, eight responded publicly and are included in the following analysis. 21
CDP Water Disclosure “In March 2009, we However, the challenging environment “Our water strategy is based on the facing South African companies has 5Rs (pRotect, Reduce, Reuse, Recycle launched The Anglo prompted a stronger response than and Redistribute), a comprehensive, Environment Way seen elsewhere. All of the respondents risk-based approach to managing have a water policy, strategy or water in our business and in the (AEW), which sets out a management plan which falls under value chain. This model provides a consistent approach to the direct oversight of the board or consistent approach, recognizing a subset thereof. Further, 88% of the different local issues and responsible environmental respondents have set a specific water circumstances faced by each of management, supporting target (compared to 59% globally), our businesses.” although all but one of these targets SABMiller our vision for minimizing is efficiency related and none seeks harm to the environment the absolute reduction in water use “Northam endeavors to run a zero that will be vital to the successful discharge operation and closely by designing, operating management of the country’s water monitors any potential impacts and eventually closing resources. Nevertheless, the indication of its operations on surface and is that South African companies groundwater sources.” all of our operations are alert to water challenges and Northam Platinum in an environmentally are putting in place the necessary management structures. responsible manner. The Anglo Environmental Way It is clear that South African companies are evaluating water risks with an eye includes 10 performance to extracting the opportunity as 88% standards, which apply identify water-related opportunities (compared to 62% globally). In South to all managed activities Africa, these opportunities range from across the world. One infrastructure improvement projects to increased recycling and wastewater of these is a Water reclamation in mining operations. Performance Standard.” Response Summary Anglo American 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Water Policy, Strategy or Plan in Place 8 Board /Executive Body Oversight of Water Policies 8 Specific Water Target Set 7 1 Provided a Figure for Total Water Withdrawal 8 Provided a Figure for Recycling /Reuse 4 4 Provided Details of Actions Undertaken in Own Operations and Beyond 8 ■ Yes ■ No 22
You can also read