Carbon Disclosure Project 2011
CEO Foreword
As this report goes to print, floods are disrupting millions of lives in Thailand and Cambodia, inundating thousands of local businesses and wiping more than 1.5% off Thailand’s GDP. Meanwhile Texas is suffering from a drought that has already lasted 12 months and by August 2011 had cost over $5.2 billion in agricultural losses according to Texas A&M University. Yet the impact of these events goes beyond the local devastation. The Thailand floods have caused disruption to the global supply of computer and automotive components, while events in Texas have led to food and agriculture losses and a reduction in export opportunities. These events are a powerful reminder of the strategic importance that water has for global business.
The advantage of understanding water’s importance is certainly tangible for the world’s clothing companies. Many struggled this year as floods and droughts in the world’s major cotton growing regions coupled with a surge in demand from Asia drove prices on the New York Cotton Exchange from 86 to 230 cents per pound in the year to March 2011. By understanding water risk in their supply chain, companies can prepare for it and manage it. That is why H&M is participating in global initiatives to educate cotton farmers on better farming practices and why PPR’s subsidiary Puma has set water use reduction targets that go beyond its operations to include its suppliers’ water use as well.
This year has seen a marked increase in the number of the world’s largest companies reporting on their water usage, on the risks that water presents, and on their responses to that risk: of the companies in the Global 500 that were sent the second CDP Water Disclosure information request, 60% responded, up from 50% in 2010. As this report, written by Deloitte, explains, responses from these companies indicate that water is impacting global business now, and yet water is not nearly as high on the corporate agenda as climate change.
The 2030 Water Resources Group predicts that the demand for water will outstrip supply by 40% by 2030 and that closing this gap could cost as much as $50 to $60 billion a year for twenty years. As growing demand for water from industrialisation and population growth is compounded by climate change and growing uncertainty of supply, the global economy will be reoriented towards businesses that take active stewardship of water resources and build resilience to shortages and floods. The companies that succeed will be those that consider water with the strategic importance it deserves and take steps to transform their business now.
CDP Water Disclosure’s goal is to aid that transformation by encouraging meaningful and systematic reporting on water globally so that investors and other stakeholders can understand how companies are building water into their core business strategies, and so that leading practices can be shared. The 354 institutional investors which requested information from their portfolio companies through us this year are the vanguard of this transformation. CDP Water Disclosure is delighted to be working together with these investors, our lead sponsors Deloitte, Molson Coors and Norges Bank Investment Management and our project sponsor Irbaris.
Paul Simpson CEO Carbon Disclosure Project
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