World's top 302 companies asked to disclose water usage

Several of the world's largest corporations, some with operations spanning several countries, have been urged to disclose their complete water usage and participate in the first voluntary water-disclosure exercise being undertaken at a global scale by London-based investor-backed non-profit organization Carbon Disclosure Project (CDP).

The CDP issued the first of its kind water-disclosure questionnaire last week in London and began a campaign that seeks to put water consumption on par with carbon emissions as a concern of company shareholders. The organization had scheduled for release of the questionnaire around this time when it launched the initiaitve around November last year.

The exercise is purely voluntary and those who have been approached may not respond. But, they are being encouraged by a pool of investors that brings with it formidable wealth, to do so. The investors represent some $16000 billion worth of assets between themselves.

The initiative comes against a backdrop of declining global water availability creating an immense challenge for companies, and a demand for increasing accountability on usage of the fast depleting resource. In fact, several reports have highlighted that poor water availability as well as an increase in its procurement cost is emerging a formidable business risk.

Several projections point out that in several areas across the world, water may not just be available to run business operations in the not so distant future. At the same time, experts have been issuing stern warnings that companies, and their investors, should start to appreciate the new category of risk to their future businesses -- running out of water.

Projects like CDP's not only manage to create awareness and help businesses and institutional investors understand the risks and opportunities associated with water scarcity and other water-related issues, but at the same time, give a unstated warning to most companies operating in water-intensive sectors.

The 302 companies asked to send in their responses by July-end include the who's who of the global business world -- ABB, Nokia, Intel, Procter & Gamble, Bayer, Boeing, Cadbury, Carrefour, Christian Dior, Danone, IBM, Johnson & Johnson, Coca-Cola, Nestle, Unilever, PepsiCo, McDonald's, Nike, Novartis, Sony Corporation, Yum Brands, among others.

Ford, PepsiCo, Molson Coors, L’Oréal and Reed Elsevier, some of whom are involved in the project in various capacities, are among those who have already accepted to respond.

Indian companies that have been sent the questionnaire are Bharat Heavy Electricals LTD (BHEL), Indian Oil, ITC, Larsen & Toubro, NTPC, ONGC, Reliance Industries, Steel Authority of India Ltd (SAIL). There is also Arcelor Mittal, the global steel giant of India-born LN Mittal.

The questionnaire asks the respondents to spell out if they have a water policy, strategy or management plan. And, if they have one, then it asks comanies to describe it.

It also asks respondents to identify the percentage of their operations in the world’s water-stressed areas and what portion of their water use comes from these regions. It asks companies to spell out their water use, recycling and discharges into or near wildlife habitats as well as list water-related risks and opportunities.

Basically, companies are being asked for details of their water footprint and also make a disclosure that they are maintaining stewardship on this count.

Companies that choose to respond to the questions have the option of making their answers available only to these investors, or to the larger public as well. Also, companies that have not been sent the questionnaire can also respond to it, if they want.

As human population growth and climate change exacerbate water shortages worldwide, such efforts will go a long way to ensure that water management remains tight, and companies and people remain accountable for their water usage.

World's leading companies not forthcoming on water-related risk disclosures: Report

Most companies operating in water-intensive sectors including utilities and computer-chip makers are failing to provide investors with enough information on water-related risks, a report has warned.

Also, investors have almost no idea how their supply chains could be hit by water shortages in the future in several cases, the report -- 'Murky Waters: Corporate Reporting on Water Risk' -- prepared by sustainable investor group CERES and financial services firm UBS, states.

Even though most of these publicly-traded companies depend on water, they do not adequately disclose their financial risks to droughts and future regulations, even as water scarcity problems mount across the world.

The report, released last month, assessed the water-related disclosures of 100 of the world's largest publicly traded companies operating in the food, drink, electricity, mining, oil and gas, semiconductor, chemicals and construction industries.

It scored the companies based on five key categories of disclosure: water accounting, risk assessment, direct operations, supply chain and stakeholder engagement.

Puting the companies' water policies on a scale of up to 100, the report found that even the best-performing firms like beverage giant Diageo, Swiss mining company Xstrata and US electricity provider Pinnacle West, scored not more than 43 points. Eighty of the 100 companies scored fewer than 30 points.

Overall, several companies did not include any information on water risks and performance in their financial filings and provided no data on how water shortages could affect facilities operating in water-stressed regions.

Non-availability of water has emerged as a formidable business risk across the world. Poor water availability as well as an increase in its procurement cost are predicted with increasing frequency and climate change and poor management of water resources are expected to exacerbate the problem of scarcity.

CERES, which is a Boston-based coalition of investors with $8 trillion USD under management, used information collected by Bloomberg LP from corporate reports and financial filings of beverage, chemicals, electric power, food, homebuilding, mining, oil and gas and semiconductor companies. UBS analyzed the data for CERES. Regulatory, reputational and litigation risks related to water supply were also looked into.

The report states that not even one company from the 100 selected had provided detailed water data on its supply chains, despite the fact that many of them operate global supply chains with sizeable water footprints across several areas of the world that are at high risk from the increased incidence of droughts.

It cites some recent incidents where businesses have been affected by regional water shortages. For instance, the drought in California last year reportedly cost the state's agricultural industry $1 billion USD (£640 million) and led to the loss of an estimated 21,000 jobs. Similarly, the 2007-08 drought in Georgia increased costs for energy firm Southern Co by $33 million as it was forced to replace falling hydroelectric power output with more costly fossil fuel-based power.

India’s Voltas seeks to acquire water treatment companies

India's leading engineering services company Voltas Ltd has charted plans to expand operations in the global water treatment business. The company is also scouting for companies for acquisition overseas as well as in India.

The company, belonging to India's second largest business group, Tatas, is eyeing small-sized companies that will allow it to get entrenched in the local industry without having to set up fresh capacities and operations. The aquired companies are expected to provide Voltas pre-qualification in the water segment in their countries.

The company is also keen to acquire small companies in the hydro-carbon industry.

Voltas officials said the company was looking to make a few small-scale acquisitions in the range of Rs 100-200 crore in the water and hydrocarbon segment.

The company has been making efforts to expand its presence in the water industry, particularly in the water treatment segment, ever since it had undertaken a Rs 300 crore sewage treatment project in Singapore in 2007. It was keen to acquire companies in Singapore and Europe but had not been able to make any progress so far.

Voltas is eyeing overseas acquisitions in the water treatment segment whereas it prefers domestic acquisitions in the hydrocarbon space.

The company offers engineering solutions and undertakes electro-mechanical projects, which also include water management and treatment. Also, with water shortages becoming a big problem in several countries including India, China and the Middle East, the company has decided to step up its focus on the water treatment industry.

Over the years, Voltas has broaden its capabilities in the entire spectrum of water and wastewater management, including treatment of water for potability as well as industrial usage. The company also makes water, wastewater and sewage treatment equipment.

The company is also expecting a slew of new orders in the coming months from West Asia, Singapore and Hong Kong, among other countries.