The water we drinkOne in five global businesses affected by growing water shortages

Published 15 November 2010

Experts say that by 2030 global water demand would outstrip supply by 40 percent; a new survey reveals that we do not have to wait that long: drought, shortages, flooding, and rising prices are already damaging companies in water-intensive industries

At least one in five of the companies using the largest amounts of water in the world is already experiencing damage to their business from drought and other shortages, flooding, and rising prices.

The wide scope of commercial problems posed by growing pressure on global water supplies and changing weather patterns is revealed by a survey of the 302 biggest companies in the most water-intensive sectors, across twenty-five countries.

The study was commissioned by the increasingly influential Carbon Disclosure Project (CDP), which conducts an annual study of what companies are doing to measure and reduce greenhouse gas emissions on behalf of investors holding $16 trillion of assets.

The Guardian’s Juliette Jowit writes that about half the companies responded to the water survey, of whom 39 percent said they were already experiencing “detrimental impacts”. In answer to a separate question, about half said the risks to their businesses were “current or near term” — in the next one to five years — a sample likely to have significant crossover with those already reporting problems.

Companies most at risk are in the food and drink, tobacco, and metals and mining sectors, says the first CDP Water Disclosure report. Other concerns listed were fines and litigation for pollution.

Marcus Norton, who headed the report, said companies that replied to the survey were more likely to have taken action to address water issues affecting their business, but he was still “impressed” by the replies: 96 percent were aware of potential problems, and two-thirds have somebody responsible for water issues at board or executive committee level.

Of the companies which did not reply, not all would be ignoring the problems, but Norton hoped in following years more companies would show they take the issue “seriously.”

I don’t think this is an issue of the price of water increasing even 10-fold, which I think in many cases it will,” he added. “For me it’s about building resilience to and avoiding catastrophic damage from water scarcity and physical risks. If you run out of water you can’t operate. We have seen floods in China and Pakistan cause hundreds of billions of dollars of damage.”

Companies that ignore water dangers “pose a risk to investments,” said Anne Kvam, head of corporate governance of Norges Bank Investment Management, a lead sponsor of the report.

The report, written by London-based consultancy Environmental Resource Management, names six companies showing “best practice” as mining giant Anglo American, consumer group Colgate-Palmolive, auto maker Ford, U.S. utility PG&E, and engineers GE and Taiwan Semiconductor Manufacturing. This was not intended to suggest the named corporations were the top six, only that subjectively they were “good examples”, said Norton.

A major report, Charting Our Water Future, commissioned by Nestlé and brewer SAB Miller among others last year, calculated by 2030 global water demand would outstrip supply by 40 percent, with shortages in some parts of the world much more severe than others, but also claimed existing management and technology could cut water use and boost supply enough to close the gap.

Nestlé chairman, Peter Brabeck-Letmathe, previously warned water is a greater threat than climate change, and called for significant rises in water prices to pressure big users to be more efficient.