Two thirds of the world’s largest companies say water problems will result in a substantive change in their business, operations or revenue, according to a report.
The international NGO, Carbon Disclosure Project (CDP), also found that 22 per cent anticipate that water challenges such as water scarcity, accessibility and poor water quality will impact their business growth now or in the next three years, according to its CDP Global Water Report 2014.
CDP's analysis is based on the water management data of 174 companies including Diageo and Unilever, listed on the FTSE Global 500 Equity Index, which was provided to CDP at the request of 573 institutional investors with US$60 trillion in assets.
Almost half of the 853 reported risks such as closure of operations and decrease in shareholder value, according to the report, and water pressures will be most keenly felt in emerging markets where companies see new opportunities for growth, such as Brazil, China, India and Mexico.
It also found, however, that companies are beginning to respond to this risk, with three quarters of them evaluating how water quality and quantity affects their growth strategy. This change comes as water increasingly moves from an operational issue into the boardroom, according to the report.
"Water is an essential resource for any business. The potential for water-related problems to damage brand value or limit corporate growth is increasingly understood,” Paul Simpson, chief executive officer at CDP, said.
“We live in a time of unprecedented demand for water and have seen the number of investors seeking accountability from companies on this issue through CDP rise more than fourfold in just four years.
“It is of grave concern that such a significant group of companies is failing to communicate management of water risks to their shareholders through our global system.”
CDP's analysis is based on the water management data of 174 companies including Diageo and Unilever.
