Corporations’ “water footprint” — assessing their water use and pollution — should be disclosed in SEC financial reports along with companies’ strategies for dealing with expected growth in water-related costs, according a report by Ceres and the Pacific Institute.
“Investors also have a significant interest and role” in encouraging companies “to look more closely at their potential risk exposure to water-related challenges,” according to the 60-page report issued today. Investors should be aware of potential financial, regulatory and reputational risks corporations face related to water usage and availability that could drive up costs, the report said.
“Companies should publicly report management activities and key metrics on their water use and impacts, and track how their performance changes over time” to help shareholders assess how companies address water risks as well as business opportunities in the area, the report said.
The “era of cheap and easy access to water is ending, posing a potentially greater threat to businesses than the loss of any other natural resource” because “there is no substitute for water,” the report said.
“We think that risk is there and is not being communicated in (SEC) filings and corporate sustainability reports,” said Brooke Barton, manager of the Ceres water program, said in an interview. “Investors don’t have a sense of the degree of risk.”
Coca-Cola, Intel and “a small number of other companies provide meaningful water disclosure in their 10-Ks,” Ms. Barton said in the interview. “I haven’t seen much else, but I haven’t done a comprehensive survey.”
In addition, the so-called CEO Water Mandate, established by the United Nations Global Compact in 2007, expects to release in mid-March a transparency framework for corporate reporting on water management and performance, Ms. Barton said. Coca-Cola, Dow Chemical, Nestle, PepsiCo, Royal Dutch Shell and Unilever endorsed the mandate, according to the report.
Ceres commissioned the report from the Pacific Institute, a research and policy analysis center focused on environmental and economic development issues. Ceres is a coalition of investors and public interest organizations working with companies on environmental issues.
