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CDP A-List: Why It Matters

Grayson

 

By E. Lynn Grayson World Water Day 2017

The Carbon Disclosure Project’s (CDP’s) Global Water Report 2016 titled Thirsty Business: Why Water is Vital to Climate Action analyzes water disclosures made through the CDP’s 2016 information request. It was aimed at companies facing water risks and opportunities and investors seeking to better understand how water issues might impact portfolios. The report provides insight into the connection between water, energy and private sector efforts to reduce carbon emissions.

 Key findings from these corporate water disclosures include: 

  1. Water related risks cost business $14 billion dollars in 2016—a fivefold increase over prior year’s costs (These financial impacts come from drought, flooding, tightening environmental regulation and the cost of cleaning up water pollution and fines)
  2. 24% of greenhouse gas reductions depend on a stable supply of good quality water
  3. 53% of companies report better water management in the context of delivering greenhouse gas reductions

The CDP report evaluates corporate performance over five key metrics relating to water management, including tracking water use, reporting and target-setting. In 2016,  61% of companies reported that they track their water use , an increase of 3% over last year.

Ford and Colgate Palmolive are among the best companies in the world when it comes to water management, according to the CDP’s Water A List. The annual index  highlights companies implementing best practices in sustainable water management. In 2016, 24 companies made the CDP Water A List, up from eight last year. Ford and Colgate Palmolive are the only two U.S. companies identified on the A List in 2016. 

So what can companies do to better manage and reduce their water-related risk? The first step is assessing water use and setting measurable targets. But unlike corporate carbon emissions, there really is no standard methodology that business relies upon to measure and monitor water use. CDP has partnered with the UN CEO Water Mandate, The Nature Conservancy, World Resources Institute and WWF to develop a methodology that will help companies set context-based water targets — essentially a science-based targets approach to water management. In light of company disclosures confirming that 54% of the 4,416 water risks identified will  materialize over the next six years, there should be no shortage of corporate interest in test-driving the upcoming water methodology.