Companies Failing on Water Stewardship Warns Ceres
Ceres launches inaugural water stewardship benchmark, as it calls for more public policy advocacy and pricing of water risks.
Companies need to take an active role in discussions with governments to ensure an enabling environment for continued sustainable water supplies, according to investor network Ceres The call to action follows its release of a new benchmark ranking the stewardship practices of 72 water-intensive firms.
The benchmark forms part of Ceres’ Valuing Water Finance Initiative, a global investor-led effort to engage with companies with a high-water footprint to value and act on water as a financial risk and drive the necessary large-scale change to better protect water systems.
Global water resources are caught in the crosshairs of unprecedented change, according to Ceres. With global freshwater demands expected to outstrip supply by 40% by 2030, businesses must change the course by developing holistic and restorative water stewardship strategies to address water risks and embrace water-related opportunities.
The guiding framework of the engagement initiative is a set of six Corporate Expectations for Valuing Water, aligned with the UN Global Compact CEO Water Mandate’s six commitment areas and the UN Sustainable Development Goal for Water (SDG 6), intended to serve as an ambition for large companies to achieve by 2030.
The six expectations – water quantity, water quality, ecosystem protection, access to water/sanitation, board oversight and public policy engagement – also form criteria for the first Valuing Water Finance Initiative benchmark released this week.
The benchmark ranks companies on four levels of ambition with the six expectations. No company among the 72 ranked as ‘Leading the way’, but 11 companies including Coca-Cola and Nestle were ranked as ‘On track’ – meeting at least 50% of the ambition spectrum. Sixty-one companies on the list are meeting less than 50% of the 2030 ambition spectrum and ranked as ‘On the way’ or ‘Starting the journey’.
Speaking to ESG Investor, Kirsten James, Senior Progamme Director, Water at Ceres, said that it hoped the benchmark would serve as an important tool for investors, both inside and outside its initiative to “recognise how important these issues are and that they can’t just be passive actors”.
Price on water
Alongside the benchmark, Ceres has outlined issues on which companies need to improve with regards to water management, including assessments with local context, focus on access to water and sanitation, protecting ecosystems critical to freshwater supplies and board oversight of water risks and governance incentives linked to water.
Another area highlighted for improvement is that only a handful of companies use basic metrics for water pricing, and none assess the full value of water to their business and society.
“We need a more complete view of what really is the true value and the full value of water, and what I mean by that is incorporating calculations around what are the benefits of a company having a sustainable supply chain where they can ensure they have commodities they need and how can a company ensure that it’s in good relations with the community around it and maintains a social licence to operate,” said James.
Ceres is developing a framework which estimates the cost of addressing water-related externalities in value chains, in partnership with water risk consultant Bluerisk, S&P Global Sustainable1, and asset manager DWS Group.
Another key gap highlighted by Ceres on companies’ water stewardship is the lack of public policy advocacy related to water.
“A company can’t simply look just within its fence line. They need to think of what’s happening around them or do they have the infrastructure that’s going to be able to bring water to them down the line. So public policy advocacy is to really ensure we have sustainable water supplies and that enabling environment. Companies need to take an active role in having those discussions with local governments, the regional governments and state governments.”
The Valuing Water Finance initiative involves 64 signatories with US$9.8 trillion in assets.
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