CDP Water Disclosure 2010 Global Report - On behalf of 137 investors with assets of US$16 trillion

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CDP Water Disclosure 2010 Global Report - On behalf of 137 investors with assets of US trillion
CDP Water Disclosure 2010
Global Report

On behalf of 137 investors with assets of US$16 trillion

Report written for                                 Carbon Disclosure Project
Carbon Disclosure Project by:                      www.cdproject.net
                                                   +44 (0) 20 7970 5660
                                                   water@cdproject.net
CDP Water Disclosure

CDP Water Disclosure 2010                        Environment Agency Active Pension fund        PhiTrust Active Investors
                                                 Epworth Investment Management                 Portfolio 21 Investments
137 financial institutions with assets
                                                 Essex Investment Management, LLC              PSP Investments
of over US$16 trillion were signatories
                                                 Ethos Foundation                              QBE Insurance Group Limited
to the CDP Water Disclosure 2010
                                                 F&C Management Ltd                            Railpen Investments
questionnaire dated April 1, 2010,
including:                                       Fédéris Gestion d’Actifs                      Real Grandeza Fundação de Previdência e
                                                 First Affirmative Financial Network, LLC      Assistência Social

                                                 Five Oceans Asset Management Pty Limited      Rei Super
Aberdeen Immobilien KAG                                                                        RLAM
                                                 Florida State Board of Administration (SBA)
AEGON-INDUSTRIAL Fund Management Co., Ltd                                                      Robeco
                                                 FRANKFURT-TRUST Investment Gesellschaft mbH
Alcyone Finance                                                                                Robert Brooke Zevin Associates, Inc
                                                 Fukoku Capital Management Inc
Allianz Group                                                                                  Rockefeller Financial Asset Management Group –
                                                 Fundação Atlântico de Seguridade Social
Amundi AM                                                                                      SRI Group
                                                 Gartmore Investment Management Ltd
APG Group                                                                                      Royal Bank of Canada
                                                 Generali Deutschland Holding AG
Aprionis                                                                                       RREEF Investment GmbH
                                                 GLS Gemeinschaftsbank eG
ARIA (Australian Reward Investment Alliance)                                                   SAM Group
                                                 GOOD GROWTH INSTITUT für globale
ASM Administradora de Recursos S.A.              Vermögensentwicklung mbH                      Santa Fé Portfolios Ltda
AustralianSuper                                  Green Cay Asset Management                    Schroders
AVANA Invest GmbH                                Green Century Funds                           SEB
Aviva Investors                                  GROUPE OFI AM                                 Seligson & Co Fund Management Plc
Bank Sarasin & Co, Ltd                           Henderson Global Investors, Sustainable &     Sentinel Investments
Banque Degroof                                   Responsible Investment (SRI) funds            Siemens Kapitalanlagegesellschaft mbH
BBVA                                             Hermes Fund Managers                          SNS Asset Management
Blumenthal Foundation                            HESTA Super                                   Social(k)
Boston Common Asset Management, LLC              HSBC Holdings plc                             Sompo Japan Insurance Inc.
British Columbia Investment Management           ING                                           Sopher Investment Management
Corporation (bcIMC)                              Jupiter Asset Management                      Standard Life Investments
British Columbia Teachers’ Federation Salary     KB Kookmin Bank                               Statewide Superannuation
Indemnity Fund
                                                 KBC Asset Management NV                       Superfund Asset Management GmbH
CAAT Pension Plan
                                                 KPA Pension                                   Sustainable Capital
Caixa Econômica Federal
                                                 La Financière Responsable                     Svenska Kyrkan, Church of Sweden
California Public Employees’ Retirement System
                                                 Living Planet Fund Management Company S.A.    Syntrus Achmea Asset Management
California State Teachers’ Retirement System
                                                 Local Authority Pension Fund Forum            The Central Church Fund of Finland
California State Treasurer
                                                 Local Government Super                        The Daly Foundation
Calvert Group, Ltd.
                                                 Lothian Pension Fund                          The Pension Plan For Employees of the Public
Canada Pension Plan Investment Board                                                           Service Alliance of Canada
                                                 Macif Gestion
Canadian Labour Congress Staff Pension Fund                                                    The Russell Family Foundation
                                                 McLean Budden
Capital Innovations Water Investment Partners                                                  The Westpac Group
                                                 Mergence Africa Investments (Pty) Limited
Catherine Donnelly Foundation                                                                  Threadneedle Asset Management
                                                 Meritas Mutual Funds
Cbus Superannuation Fund                                                                       Tokio Marine & Nichido Fire Insurance Co., Ltd.
                                                 Mitsubishi UFJ Financial Group (MUFG)
Central Finance Board of the Methodist Church                                                  Trillium Asset Management Corporation
                                                 Mizuho Financial Group, Inc.
Ceres, Inc.                                                                                    Triodos Investment Management
                                                 Monega Kapitalanlagegesellschaft mbH
Christian Super                                                                                Union Asset Management Holding AG
                                                 National Australia Bank
Christopher Reynolds Foundation                                                                UNISON staff pension scheme
                                                 National Bank of Canada
CM-CIC Asset Management                                                                        UniSuper
                                                 National Pensions Reserve Fund of Ireland
Colonial First State Global Asset Management                                                   United Methodist Church General Board of
                                                 Neuberger Berman
Commerzbank AG                                                                                 Pension and Health Benefits
                                                 Newton Investment Management Limited
CommInsure                                                                                     Vancity
                                                 NH-CA Asset Management
Connecticut Retirement Plans and Trust Funds                                                   VicSuper Pty Ltd
                                                 Nissay Asset Management Corporation
Co-operative Financial Services (CFS)                                                          Victorian Funds Management Corporation
                                                 Nordea Investment Management
Corston-Smith Asset Management Sdn. Bhd.                                                       Waikato Community Trust Inc
                                                 Norges Bank Investment Management (NBIM)
Daiwa Securities Group Inc.                                                                    Walden Asset Management, a division of Boston
                                                 Northern Ireland Local Government Officers’   Trust & Investment Management Company
DekaBank Deutsche Girozentrale                   Superannuation Committee (NILGOSC)
Deutsche Bank AG                                                                               WARBURG - HENDERSON
                                                 Northwest and Ethical Investments L.P.        Kapitalanlagegesellschaft für Immobilien mbH
Development Bank of Japan Inc.                   Oregon State Treasurer                        WestLB Mellon Asset Management (WMAM)
Dexia Asset Management                           Pax World Funds                               Winslow Management, A Brown Advisory
Domini Social Investments LLC                    Pension Protection Fund                       Investment Group
Element Investment Managers                      PFA Pension                                   Zurich Cantonal Bank
2
Contents

Contents
           CDP Water Disclosure Signatories 2010                2

           Foreword                                             4

           Executive summary                                    5

           Corporate water sustainability in context            8

           Sector overview                                     10

           Geographical overview                               18

           South Africa focus                                  20

           Best practice                                       24

           Sector snapshots
           Chemicals                                           26
           Construction, Infrastructure & Real Estate          28
           Food, Beverage & Tobacco                            30
           Industrial & Manufacturing                          32
           Metals & Mining                                     34
           Oil & Gas                                           36
           Pharmaceuticals & Biotechnology                     38
           Retail, Consumer Discretionary & Consumer Staples   40
           Technology & Communications                         42
           Utilities                                           44

           Appendix: Target sample, voluntary responders       46

                                                                          3
CDP Water Disclosure

Foreword
Paul Dickinson, Executive Chairman Carbon Disclosure Project
Demand for water is projected to outstrip supply by a staggering 40 percent by 2030, and an estimated half the world’s population
are likely to live in areas of high water stress by the same year. The impacts on water resources of population growth, rising
per capita demand and climate change are already being felt, albeit unevenly across different sectors and geographies. These
impacts will increasingly present risks from physical disruptions to operations and supply chains, changing regulatory regimes and
reputational damage from misuse, or perceived misuse, of this shared, life-sustaining resource. But the changing availability of water
resources will also present opportunities to business through demand for new infrastructure, products and services. Now is the time
to start seizing these opportunities, addressing water challenges and building resilience – not once the well has run dry.

So is water the new carbon? In the sense that water presents an equally pressing challenge to the long term sustainability of
business, yes it is, and the need for greater transparency and access to high quality information to inform and improve decision
making is just as vital. As companies have repeatedly demonstrated with carbon, what they measure they manage. Thinking
about challenges in a strategic way will enable them to mitigate risks and identify opportunities, putting companies in a far stronger
position to navigate a water-constrained world than would otherwise be the case.

In other respects water is very different from carbon. Whereas sustainable alternatives to carbon do exist, for water there is no
substitute. The challenge therefore lies in managing what we have among competing users, be they businesses, communities or
ecosystems. Those competing users or “rivals” (from the Latin for a neighbour who shares a stream) are linked by the geography
and politics of their local water systems, making water a local rather than a global management issue, even if its impacts can be felt
across the world through the displacement of populations and higher commodity prices.

CDP Water Disclosure’s goal is to make meaningful, systematic and comparable reporting on water a standard corporate practice
globally, enabling investors, companies themselves, governments and other stakeholders to put this data at the heart of their
decision making. More immediately, we seek to raise awareness and enhance understanding of water-related issues, and this
excellent report by Environmental Resources Management (ERM) Ltd should do just that. We are also delighted to be working
with our two lead sponsors, Molson Coors and Norges Bank Investment Management (NBIM) and with our project sponsor,
Irbaris, and we wholeheartedly applaud all 175 companies at the vanguard of water disclosure that reported through us in our
inaugural year.

Paul Dickinson
Executive Chairman, Carbon Disclosure Project

4
Executive summary

Introduction                                                     Highlights from                            do so for their supply chains. Sectors
                                                                 2010 disclosures                           reporting the greatest exposure to water
CDP Water Disclosure replicates                                                                             risks are Food, Beverage & Tobacco
and builds on the tried-and-trusted                              The response rate among target             and Metals & Mining, while Chemicals
methodology and process that the                                 companies has been impressive for the      and Technology & Communications
Carbon Disclosure Project (CDP) has                              program’s first year. Of the 302 target    report the least. There is a clear
used for carbon and climate change                               companies, 150 (50%) responded             opportunity for improvement and
since 2003. Backed by 137 institutional                          to the questionnaire. A further            focused attention on supply chains in
investors representing $16 trillion in                           25 companies also responded                the coming years.
assets, this year CDP sent its first                             on a purely voluntary basis2.
annual water questionnaire to 302 of                             The strong response rate in this           Water is a current, not a future,
the world’s 500 largest companies in                             inaugural year is indicative of the high   corporate issue. The immediacy
the FTSE Global Equity Index Series,                             level of importance being placed on        of water as a corporate issue was
focusing on sectors that are water                               water by global corporations across        highlighted by the timescales associated
intensive or are particularly exposed                            sectors and geographies.                   with water-related risks, with more
to water-related risks.                                                                                     than half of the risks identified across
                                                                 Water has climbed high on the              all categories (physical, regulatory and
Although water issues are as unique                              corporate agenda. 67% of responding        ‘other’) being classified as either current
and varied as their local context,                               companies report that responsibility       or near-term (1-5 years), and 39% of
the overarching concern of water                                 for water-related issues lies at the       companies already having experienced
management is access: whether the                                Board or Executive Committee level,        detrimental impacts. These impacts fall
appropriate quantity and quality of                              while 89% have developed specific          into the broad categories of disruption
water is available for competing human                           water policies, strategies, and plans.     to operations from drought or flooding
users and for environmental health                               Encouragingly, 60% have set water-         (in one case resulting in $100 million
both now and in the future. The CDP                              related performance targets.               in remediation costs), declining water
Water Disclosure questionnaire brings                                                                       quality necessitating costly on-site
insight into the challenges that this                            Response rates vary widely                 pre-treatment, increases in water
presents to companies by requesting                              between different sectors and              prices, and fines and litigation relating
information on their water strategies                            geographies. 100% of companies in          to pollution incidents.
and management plans, on their water-                            the Chemicals sector responded
related risks and opportunities, and on                          compared with just 29% in the Oil &        Corporations are identifying
their water use within the context of                            Gas and Construction, Infrastructure &     a wide range of water-related
local scarcity or abundance.                                     Real Estate sectors. Responses were        opportunities. Even in this early
                                                                 received from companies in a total of 25   phase of water reporting, 62% of
This report1, prepared by                                        countries, with the highest number of      respondents identify significant water-
Environmental Resources Management                               responses coming from the US (59, 57%      related business opportunities. Widely
Ltd (ERM) analyses the responses                                 responding), the UK (14, 64% responding)   cited examples include improved
to the CDP Water Disclosure 2010                                 and Japan (13, 45% responding), and        water management practices leading
questionnaire. Throughout this report,                           the highest response rates from South      to reduced operating costs (e.g. for
response rates reflect the full number                           Africa (100%), Germany (83%), and          mines and industrial and manufacturing
of responders while all other statistics                         Switzerland (71%).                         processes), increasing urbanization
include only those companies that                                                                           and population growth expanding the
have chosen to make their responses                              Respondents have a good overall            market for water treatment chemicals
publicly available. These responses are                          awareness of water risks and water         (particularly in Asia), and a growing
available to view at www.cdproject.net.                          usage within their own operations,         demand for water infrastructure to
                                                                 but much less knowledge of their           support growing populations and to
1.	Please see the Important Notice on the inside back cover     supply chains. 96% of responding           adapt to climate change (e.g. flood
    of this report regarding its content and use.
                                                                 companies were able to identify whether    defense and stormwater systems).
2.	The statistics reported only include responses from
    the 302 targeted companies in order to ensure that
    subsequent reports compare a similar dataset. Best
                                                                 their own operations are exposed to
    practice and other elements of the report also draw on the   water risks while just 53% were able to
    25 purely voluntary responses received from companies
    outside the target 302 who are listed in the Appendix.
                                                                                                                                                     5
CDP Water Disclosure

This report does not rank or score
companies either on the quality of their   Molson Coors Brewing Company commentary
disclosures or on their performance in
                                           Peter Swinburn, President & CEO
water management. However, it does
contain numerous examples of best
practice from a wide range of
companies, notably from the likes of       Plentiful, fresh water is what brought John Molson to the banks of the
Anglo American, Colgate-Palmolive,         St. Lawrence River in Montreal, Adolph Coors to Clear Creek in Golden,
Ford Motor, General Electric,              Colorado, and it was the waters beneath Burton-on-Trent that gave birth to
PG&E and Taiwan Semiconductor              the British brewing industry we know today. Water is the #1 ingredient in beer
Manufacturing. These companies,            and the quality of our beer is tied directly to the quality of the water we use to
                                           produce it. Ensuring fresh water as a sustainable resource is not just part of
and many others, have recognized
                                           our heritage, it also plays a vital role in our future.
the critical nature of water to their
business and are taking steps on           As a global brewer with over 350 years of experience developing and
the journey towards sustainable            implementing real-world solutions for water use and conservation, we have
water management.                          learned that solutions to global water issues are often locally based and
                                           require individuals, non-profit organizations, and corporations to engage
                                           and collaborate in their watersheds and communities. We have also learned
                                           that transparency must serve as the cornerstone for stimulating integrated
                                           watershed resource management.

                                           Although many companies have increased their knowledge and transparency
                                           around operational water use, many still have work to do with respect to
                                           water usage across supply chains. At the same time, the cost savings and
                                           risk mitigation opportunities inherent in closer evaluation of water use is
                                           contributing to even greater focus and action.

                                           We are encouraged that CDP Water Disclosure has received such a strong
                                           response from companies in its inaugural year. This is an indication of the
                                           growing importance that companies and their investors are placing on water
                                           issues. As we enter a new era of increased expectations around water
                                           management and reporting, the growing interest that is building behind
                                           CDP’s efforts is a valuable signal that we are moving collectively in the
                                           right direction.

                                           Working with CDP on this issue is a logical next step for corporations that are
                                           committed to clean water and water sustainability. It’s clear that collaboration
                                           and progress require working from the same, reliable information and CDP
                                           Water Disclosure is perfectly positioned to normalize best practice and
                                           mediate between investors and companies in valuing risks and opportunities.
                                           As we move forward, companies must accept the responsibility for their own
                                           transparency and join in this effort to help advance what will hopefully emerge
                                           as a common water reporting standard benefiting all stakeholders.

                                           On behalf of Molson Coors, I want to congratulate CDP Water Disclosure on
                                           a very successful first year. We look forward to exploring new opportunities to
                                           encourage and support this critical initiative on behalf of the key stakeholders
                                           that have a vested interest in the continued success of companies like ours,
                                           as well as the various communities where we operate globally.

6
Executive summary

                                                                                “As both the world
Norges Bank Investment Management (NBIM) commentary
                                                                                  population and the
Anne Kvam, Global Head of Ownership Strategies
                                                                                  demand for clean water
                                                                                  are increasing, water
NBIM is responsible for investing the assets of the Norwegian Government          availability is decreasing
Pension Fund Global. NBIM uses its ownership rights to safeguard the
fund’s assets by promoting good corporate governance and high social and          in some locations around
environmental standards at companies it invests in.
                                                                                  the world. For its part,
As a diversified investor with a long-term outlook and investments in a range     Colgate strives to use
of sectors at risk from increasingly scarce water resources, we take water
management seriously. Companies that fail to consider the impact of water         this natural resource
scarcity and other water-related risks pose a financial risk to investments.
                                                                                  more efficiently and has
As lead partner in CDP Water Disclosure and with water management as              established water-related
one of our strategic focus areas, NBIM is very pleased with the outcome of
the project’s first questionnaire. The strong response rate suggests that         goals to ensure we do so.
companies recognise water is a critical issue that needs to be dealt with
promptly and adequately. It also indicates that companies understand the
                                                                                  Our strategy is company-
importance of disclosing and reporting on their water management.                 wide and applies to all
Also encouraging is that many companies see water as a significant area
of opportunity.                                                                   manufacturing and R&D
                                                                                  sites around the world.”
As expected, many companies have a good awareness of water-related risks
in their own operations, but considerably less knowledge about risks in their
supply chains. We hope this report will encourage companies to focus more
on water management in the supply chain. Sustainable water management is
                                                                                Colgate-Palmolive
vital for the long-term performance of companies.

Irbaris LLP commentary
David Hampton, Managing Partner

Disclosure of environmental risks and opportunities is increasingly important
to many stakeholders and it is exciting to see the high level of response to
the CDP’s inaugural Water Disclosure questionnaire, especially given how
events in the past 12 months have demonstrated the devastating social and
economic effects of both too much and too little water.

As is made clear in throughout this report, water issues are already creating
challenges and opportunities for many businesses. One critical role for
disclosure is as a catalyst for change. Corporate actions on water are
required on two levels. Clearly, companies should be taking steps to reduce
water usage and water-related risks along their supply chain. They also need
to consider how the (future) water constrained world could look and what
it could mean for customers, suppliers and communities in which the
company operates.

Water disclosure is at an early stage and, although rapid progress is
being made, much still needs to be done. We fully expect that CDP Water
Disclosure will become an essential source of information and insight for
internal and external stakeholders to help catalyze companies to take the
necessary actions.

                                                                                                                7
Corporate water
     sustainability in context

“Typically water is a get       In November 2009, CDP published            In addition, there has been a recent
                                 the results of a Water Disclosure Pilot    focus on the notion and formalization
  into business and/or stay      that was undertaken as part of CDP         of water rights, evidenced by the
  in business requirement.       Supply Chain in 2008. The report           declaration in July 2010 by the United
                                 noted the growing issue of water           Nations General Assembly that clean
  The mining industry is         scarcity, and highlighted the limited      water and sanitation are a fundamental
  dependent on water, and        business awareness of the issues,          human right. The declaration received
                                 risks and opportunities associated         a large amount of publicity and has
  water is a finite resource.    with water. Only half of the respondents   increased the salience of water access
  With water scarcity            viewed water as a significant risk for     as an international political issue,
                                 their business or their supply chain,      illustrated by the Stockholm Statement
  scenarios a looming threat,    and the majority of companies focused      that emerged from World Water Week,
  the identified opportunities   largely on water management issues         and discussions around water in the
                                 in their own facilities.                   context of funding for climate change
  will enable Anglo Platinum                                                adaptation in advance of COP16 in
  to continue with business-     Since the 2008 Pilot, the focus on         Cancun at the end of November 2010.
                                 corporate water management has
  as-usual and enable long-      been strengthened in a range of ways.      There is also growing evidence of
  term expansion plans.”         Firstly, in the last six to nine months    broader corporate understanding
                                 there have been a number of water-         of the water issue in terms of the
                                 related incidents that have served to      formalization of the link between
    Anglo Platinum               move the issue up the agenda. The          water and energy (or the “water-
                                 major floods in China and Pakistan         energy nexus”). The increasing focus
                                 have together resulted in almost           on “unconventional petroleum” sources
                                 $100 billion in damage to date.            such as oil shales, tar sands and coal
                                 Shares in the Zijin Mining Group were      seam gas, which require significant
                                 suspended from trading on the Hong         water inputs during extraction and
                                 Kong stock exchange on October             production and can also lead to the
                                 4th 2010 in advance of disclosure          discharge of significantly polluted
                                 of the penalties and clean-up costs        wastewaters, is a case in point.
                                 associated with the 2.4 million gallon     Global Water Intelligence for example
                                 acid spill into the Ting river in July     estimated that it takes 11 barrels
                                 2010. The Ajka aluminium waste spill       of water to transport and separate
                                 in Hungary has now reached the             each barrel of bitumen from Canadian
                                 Danube, having extinguished all life       tar sands2.
                                 from the Marcal river. Widespread
                                 drought conditions in China, Argentina,
                                 Russia and New Zealand have
                                 hurt profits in the agricultural and
                                 hydroelectric sectors. The business
                                 impacts of water issues are becoming
                                 increasingly evident.

                                                                            1.	The statement urged the high-level Plenary Meeting on
                                                                                the Millennium Development Goals to “act upon the
                                                                                fundamental roles of water resources, drinking water,
                                                                                sanitation and water for all” Stockholm International
                                                                                Water Institute, 2010. http://www.siwi.org/sa/node.
                                                                                asp?node=1044
                                                                            2.	Global Water Intelligence, 21st January 2010. www.
                                                                                globalwaterintel.com/insight/how-can-we-meet-oils-
                                                                                growing-demand-water.html).

8
Corporate water sustainability in context

The response of the corporate sector        The concept of water footprinting         “Climate Change and
to these various developments has           emerged in the early 2000’s from the
been varied, as demonstrated by             work of Arjen Hoekstra at UNESCO-           global warming could
the 2010 CDP Water Disclosure               IHE and has been the subject of             reduce snow pack and
responses, but it generally recognizes      much discussion from a corporate
the increasing importance that              perspective. While there have been          runoff volumes needed
water plays in an organization’s            controversies over the specifics of the     to support Hydro electric
“license to operate”, particularly          process, the establishment of an ISO
in areas that are water-stressed            working group for the development           generation. This, in turn,
or that are likely to become                of a water footprinting standard may        is likely to raise the cost
so. Widespread business support             herald progress. This working group
for the various corporate water             seeks to establish a methodology            of energy production.
initiatives that have emerged in the        which will allow users to understand        Those costs could have
recent past is a clear indicator of this    the water process more fully,
growing corporate interest in current       identify the reduction “pressure            a direct impact on the
approaches to water sustainability.         points” within the process, and             financial bottom line for
The work of organizations such as           ensure the comparability and
the CEO Water Mandate, the Alliance         accuracy of the footprints.                 the company.”
for Water Stewardship, and the newly
upgraded WBCSD Water Project are            Whilst progress in water accounting/
helping to place business at the centre     water footprinting has been uneven,       Air Products and
of the global response to the problem       a concept that has received significant   Chemicals
of water scarcity. The corporate            growing support within the last year
response to water management has            is that of “water stewardship”. The
also led to the emergence of more           water stewardship concept seeks to
in-depth methodologies for measuring        broaden the focus of corporate
and understanding organizational            water sustainability away from
water use.                                  simply quantifying water use
                                            volumes, to the active promotion
Businesses are increasingly realizing       of responsible water usage.
that it is no longer sufficient to simply   Championed globally by the Alliance
gather and report on water usage and        for Water Stewardship the concept
discharge volumes, but that there is an     is aimed at creating “a program that
additional need to further characterize     recognizes and rewards water users
this water usage, by understanding          and managers who take major steps
both the geography of usage, the            to minimize the impacts of their water
nature of water sources and the scale       use and management”.
of overall impacts resulting from
abstraction and discharge. This is          The Carbon Disclosure Project’s
most comprehensively achieved               launch of CDP Water Disclosure
through the process of water                marks another significant milestone
footprinting, which allows a                towards improved corporate water
comprehensive assessment of                 management. The program is building
water usage across a company’s              on an extremely effective blueprint,
operations within a defined scope.          and the high level of engagement
                                            from companies in this inaugural
                                            year suggests that it is well placed
                                            to serve as a driver for improved
                                            water measurement and management
                                            and the global dissemination of best
                                            practice relating to water, and to
                                            provide a reservoir of data and
                                            knowledge to inform decision
                                            making by investors, companies,
                                            governments and other stakeholders
                                            in the coming years.

                                                                                                                                 9
Sector overview

“Industries need clean,                                         Introduction                               In addition, 25 companies from
                                                                                                            outside the target sample responded
  abundant, secure, and                                          There has been an impressive               on a purely voluntary basis. These
  competitively priced                                           response to the program’s first            companies are not included in the
                                                                 questionnaire, with 150 (50%) of the       statistical analysis but examples
  sources of water and                                           target sample of 302 companies             of best practice and other elements
  have a responsibility to                                       responding. Of these, a very               of the report draw on their responses.
                                                                 creditable 122 (81%) chose to make
  the public debate on                                           their responses publicly available.        Sector response rates
  water policies that                                            Throughout this report, response rates
                                                                 reflect the full number of responders      A sector-by-sector comparison
  affect industries.”                                            while all other statistics include only    provides an insight into the particular
                                                                 those companies that have chosen to        challenges and opportunities each
                                                                 make their responses publicly available.   sector faces and the extent to which
  Caterpillar
                                                                                                            they are taking action. Certainly,
                                                                                                            response rates varied widely across
                                                                                                            sectors, with the rates for Chemicals
Fig. 1: Number of responding companies and response rates by sector                                         (100%) and Pharmaceuticals & Biotech
                                                                                                            (81%) in stark contrast to those for
Chemicals
                                                                                                            Oil & Gas (29%) and Construction,
                                                                                                            Infrastructure & Real Estate (29%).
                                                                                               10 (100%)
                                                                                                            Given the importance of water to these
Construction, Infrastructure & Real Estate                                                                  sectors, and their potential impacts on
                             6 (29%)                                                                        water supplies, a greater commitment
                                                                                                            to reporting would be desirable.
Food, Beverage & Tobacco

                                                                 15 (63%)

Industrial & Manufacturing

                                                23 (49%)

Metals & Mining

                                                             16 (59%)

Oil & Gas

                       15 (29%)

Pharmaceuticals & Biotechnology

                                                                                 17 (81%)

Retail, Consumer Discretionary & Consumer Staples

                                              17 (49%)

Technology & Communications

                                                             17 (59%)

Utilities

                                     14 (39%)

0%          10%         20%          30%        40%          50%         60%    70%    80%     90%   100%
                                                    Percentage response rates

10
Sector overview

Water targets and goals                                           The number of companies reporting                                      “Our goal is to reduce our
                                                                  absolute targets for water reduction
Water is already high on the corporate                            or water efficiency targets is notable.                                  Group freshwater use per
agenda with 67% of respondents                                    Slightly more companies reported                                         tonne of product by six
reporting responsibility for water-                               absolute targets (36) than efficiency
related issues at the board or executive                          targets (33), which is encouraging                                       per cent by 2013 from
committee level, and 89% already                                  given that the former are generally                                      a 2008 baseline.”
having developed water policies,                                  more onerous and are considered best
strategies or plans. Encouragingly, 60%                           practice, particularly in water-stressed
of respondents disclosed concrete                                 regions. In many cases companies                                           Rio Tinto
performance goals - which are essential                           reported both absolute and efficiency
to improving water management - for a                             targets, which is why for sectors
range of indicators including reductions                          such as Food, Beverage & Tobacco
in use, quality of discharges, sustainability                     the combined number of companies
of supply (including river management),                           reporting these targets (14) in Figure
provision of safe drinking water to                               3 exceeds the number of companies
local communities and community                                   reporting any target (12) in Figure 2.
engagement. As illustrated in Figure 2,
Food, Beverage & Tobacco (100%)                                   “In 2009, GE’s water use was 10.7
are clear leaders while Oil & Gas (8%)                            billion gallons, a 30% reduction
perform particularly poorly.                                      from 2006.”
                                                                  General Electric

Fig. 2: Number of companies setting                                                          Fig. 3: Number of companies setting absolute reduction
any water-related target                                                                     and efficiency targets

Chemicals                                                                                    Chemicals

                                    4 (50%)                                       4 (50%)                2       1
Construction, Infrastructure & Real Estate                                                   Construction, Infrastructure & Real Estate

                                     3 (50%)                                      3 (50%)                2       1

Food, Beverage & Tobacco                                                                     Food, Beverage & Tobacco

                                                                                12 (100%)                                        5                                                              9

Industrial & Manufacturing                                                                   Industrial & Manufacturing

                                                               11 (79%)           3 (21%)                                                6                             4
Metals & Mining                                                                              Metals & Mining

                              6 (43%)                                             8 (57%)        1                                               6
Oil & Gas                                                                                    Oil & Gas

1 (8%)                                                                           11 (92%)        1
Pharmaceuticals & Biotechnology                                                              Pharmaceuticals & Biotechnology

                                                               11 (79%)           3 (21%)                                4                       3
Retail, Consumer Discretionary & Consumer Staples                                            Retail, Consumer Discretionary & Consumer Staples

                                         9 (56%)                                  7 (46%)                                        5                                     5
Technology & Communications                                                                  Technology & Communications

                                                                 11 (85%)         2 (15%)                                                6                     3
Utilities                                                                                    Utilities

                        5 (38%)                                                   8 (62%)                                4       1

0%      10%       20%        30%    40%      50%      60%       70%       80%     90%   100% 0       1       2       3       4       5       6       7     8       9       10   11   12    13       14   15    16

                                   Percentage response rates                                                                                             Total

■ Specific target reported (73)                                                              ■ Absolute target (36)
■ No specific target reorted (49)                                                            ■ Efficiency target (33)

                                                                                                                                                                                                              11
CDP Water Disclosure

“Recent investments              Exposure of companies’ own                                         Identification of risks in own
  have had to be made to          operations to water stress                                         operations and supply chains
  improve water security          Overall, an impressive 88% of                                      Companies face numerous water-
                                                                                                     related risks and for the purposes
  following a water supply        companies are able to identify which
                                                                                                     of the questionnaire they are broken
                                  of their operations are located in water-
  shortfall identified in 2004    stressed areas, signaling a high degree                            down into three categories:
  for the Sasol Secunda           of awareness of the significance of
                                                                                                     • ‘physical risks’ including
                                  water to continuing operations. Retail,
  Operations in South             Consumer Discretionary & Consumer                                     exposure to water stress, flooding
                                                                                                        and pollution;
  Africa. A R2.7billion           Staples (63%) scored notably less than
                                                                                                     • ‘regulatory risks’ including
                                  average and would be advised to
  Vaal River Eastern Sub-         map the exposure of their sites to                                    higher tariffs, the redistribution of
                                                                                                        water rights and more stringent
  system (VRESAP) pipeline        water stress.
                                                                                                        regulations governing water quality;
  project, in which Sasol                                                                               and
                                                                                                     • ‘other risks’ including reputational
  has a 40% share, has                                                                                  risk (harming the corporate brand),
  been commissioned and                                                                                 infrastructure risk (disrupting
                                                                                                        operations), and product risk (felt
  will provide an additional                                                                            through decreased demand for
  reliable supply of water                                                                              water-intensive products).
  from the Vaal Dam to
  both the Sasol Secunda          Fig. 4: Companies able to identify whether their own operations
                                  are located in water-stressed regions
  operations and for
  use by the electricity          Chemicals

  utility Eskom.”                                                                                                            7 (88%)      1 (12%)

                                  Construction, Infrastructure & Real Estate

 Sasol                                                                                                                   5 (83%)          1 (17%)

                                  Food, Beverage & Tobacco

                                                                                                                                        12 (100%)
“Motorola conducts routine
  risk assessments to             Industrial & Manufacturing

                                                                                                                                   13 (93%) 1 (7%)
  identify high-risk situations
  that could adversely affect     Metals & Mining

                                                                                                                                   13 (93%) 1 (7%)
  our operations. Our crisis
                                  Oil & Gas
  teams have developed                                                                                                  10 (83%)          2 (17%)
  preparedness plans to
                                  Pharmaceuticals & Biotechnology
  ensure that our response                                                                                                              14 (100%)
  will be effective and our       Retail, Consumer Discretionary & Consumer Staples

  recovery swift.”                                                                                10 (63.5%)                            6 (37.5%)

                                  Technology & Communications

 Motorola                                                                                                                11 (85%)         2 (15%)

                                  Utilities

                                                                                                                               12 (92%) 1 (8%)

                                  0%          10%         20%          30%      40%            50%         60%    70%        80%        90%   100%

                                  ■ Yes ■ No                                          Percentage response rates

12
Sector overview

In general, respondents reported a          Fig. 5: Risks reported for own operations and supply chains
good awareness of the water-related
risks to their own operations, with
                                            16                  12          8                 4                     0                   4                    8                12               16
just 4% unable to identify whether                                    Own Operations                                                                Supply Chain
they are or are not subject to such
                                                                                                               Chemicals
risk. Companies in Food, Beverage &              A                           2        4                    2                    3                        5                                 A
Tobacco (81%) and Metals & Mining                B                           2        4                    2                    3                        5                                 B
(81%) were most likely to report                 C                           2        4                    2                    3                        5                                 C
exposure to physical risks, while those                                                    Construction Infrastructure & real Estate
in Chemicals (20%) and Technology                                                     3                3                        3           2 1
& Communications (31%) were least                                                     3                3                        3           2 1
likely to. Similar patterns were also                                                 4                    2                2               3 1
                                                                                                      Food, Beverage & Tobacco
exhibited for regulatory and other risks.
                                                                 2     10                                                                                            10       2
                                                                 5               7                                                                   7 7 2                    3
Perhaps unsurprisingly given its                                 5               7                                                          5        2                        5
newness as an area of management                                                                      Industrial & Manufacturing
focus, 47% of respondents were                         6                     8                                                                  6                     4                4
unable to identify whether their supply                8                              6                                                     5                         5                4
chains are subject to water-related risk.              10                                         4                             3                                6                     5
For many sectors, including all those                                                                      Metals & Mining
                                                       2         12                                                                                  7           2                     5
connected with agriculture, supply
                                                       4               10                                                                   5                                          9
chains are central to understanding
                                                       9                                  5                                 2               3                                          9
and managing water risk. Such risk                                                                             Oil & Gas
can be mitigated through risk mapping                            8                                4                         2                        5                        5
and assisting and encouraging                                    7                        5                                 2                   4                             6
suppliers to reduce their own                                    6                    6                                     2                        5                        5
water footprints, but according to                                                            Pharmaceuticals & Biotechnology

disclosures, such practice is not yet                  9                                  5                                                     6                         5            3
commonplace. Companies would be                        8                              6                                                     5                         5                4
                                                       7                         7                                                          5                    4                     5
well advised to remedy this.                                                         Retail, Consumer Discretionary & Consumer Staples
                                            3               8                             5                                                     6 1                                         9
“To grow our business sustainably           2          10                                         4                             3                 4                                         9
we need to reduce the total amount          4                    11                                             1               3           2                                              11
of water used across our value chain,                                                             Technology & Communications

especially in regions where water                           9                                     4                         2                   4                                  7
availability is already under pressure                      11                                             2                2                   4                                  7
from climate change.”                                       10                                         3                1                   4                                      8
                                                                                                                Utilities
Unilever                                                    7                         6                                 1                   4                                      8
                                                            7                         6                                 1           3                                              9
                                                            9                                 4                         1           3                                              9

                                            16                  12          8                 4                     0                   4                    8                12               16
                                                 Yes        No        Don’t know                                                            A: Physical B: Regulatory C: Other

                                                                                                                                                                                           13
CDP Water Disclosure

“We promote water                    Water withdrawals,                           While one respondent repudiated
                                      reuse and recycling                          the mantra “you can’t manage
  conservation with our                                                            what you don’t measure”, accurate
  suppliers. We routinely             While 86% of respondents disclosed           measurement allows the methodical
                                      the total volume of water that they          identification and implementation
  ask suppliers about their                                                        of water-saving methods, as well as
                                      withdraw, only 64% provided a
  conservation programmes             breakdown of this figure (giving it either   the accurate tracking and reporting
                                      geographical or organizational context),     of progress, and should sensibly
  when we issue requests for                                                       form an integral part of all water
                                      and only 42% provided a figure for
  proposal, as well as their          recycling and reuse. Overall, Metals         management programs.

  overall environmental, safety       & Mining had the highest reporting
                                      rate and Utilities and Oil & Gas the
  and health performance.”            lowest. Clearly, there is still work to
                                      do in terms of reporting basic water
                                      metrics, though part of the problem
 AEP                                  unquestionably lies with the lack
                                      of a standard measuring and
                                      reporting methodology.

Fig. 6: Proportion of companies reporting figures for withdrawals and reuse /recycling

                               Provided figure for total     Withdrawal figure broken           Provided figure for
                                     withdrawal              down by geography etc.              recycling/reuse

Chemicals                                88%                              88%                           38%

Construction,
Infrastructure &                        100%                             100%                           33%
Real Estate

Food, Beverage & Tobacco                 92%                              58%                           33%

Industrial & Manufacturing               93%                              64%                           36%

Metals & Mining                         100%                              86%                           79%

Oil & Gas                                50%                              42%                           33%

Pharmaceuticals &
                                        100%                              71%                           50%
Biotechnology

Retail, Consumer
Discretionary & Consumer                 81%                              63%                           25%
Staples

Technology &
                                        100%                              69%                           58%
Communications

Utilities                                62%                              23%                           23%

Totals                                   86%                              64%                           42%

14
Sector overview

Detrimental impacts from                                              treatment, increases in water prices,       “Extreme weather events
water already suffered                                                and fines and litigation relating to
                                                                      pollution incidents.                          such as hurricanes or
Water is not just a concern for the                                                                                 flooding can … require a
future but is quite clearly a current                                 The immediacy of water as a corporate
issue which is biting companies                                       issue was further highlighted by the          shut-down of our plants or
already. A highly significant proportion                              timescales associated with water-             hamper normal operations.
of respondents (39%) report that they                                 related risks, with more than half of the
have suffered detrimental impacts from                                risks identified across all categories        This is associated with
water in the past five years, with Metals                             (physical, regulatory and other) being        production losses, not
& Mining (64%), Utilities (62%) and                                   classified as either current or near-term
Chemicals (50%) worst affected.                                       (1-5 years).                                  only in terms of production
These detrimental impacts fall into                                                                                 being temporarily stopped,
the broad categories of disruption to
operations from drought or flooding
                                                                                                                    but also in terms of the
(in one case resulting in $100 million                                                                              transport of raw materials
in remediation costs), declining water
quality necessitating costly on-site pre-
                                                                                                                    and products by ship.”

                                                                                                                  BASF
Fig. 7: Companies reporting having suffered detrimental impacts from water

Chemicals

                                                       4 (50%)                                        4 (50%)

Construction, Infrastructure & Real Estate

                                                                                                     6 (100%)

Food, Beverage & Tobacco

                                             5 (42%)                                                  7 (58%)

Industrial & Manufacturing

                                             6 (43%)                                                  8 (57%)

Metals & Mining

                                                                       9 (64%)                        5 (36%)

Oil & Gas

                                             5 (42%)                                                  7 (58%)

Pharmaceuticals & Biotechnology

                                             6 (43%)                                                  8 (57%)

Retail, Consumer Discretionary & Consumer Staples

                                        6 (40%)                                                       9 (60%)

Technology & Communications

                  3 (23%)                                                                            10 (77%)

Utilities

                                                                      8 (62%)                         5 (38%)

Total

                                     47 (39%)                                                        75 (61%)

0%          10%         20%          30%          40%           50%         60%    70%      80%      90%   100%

■ Yes ■ No                                             Percentage response rates

                                                                                                                                                 15
CDP Water Disclosure

“Air Liquide has developed                Fig. 8: Companies identifying water as an opportunity
  several solutions for
  water treatment in the                   Chemicals

                                                                                                                                           7 (88%)         1 (12%)
  fields such as gas to liquid
  transfer, activated sludge
                                           Construction, Infrastructure & Real Estate

                                                                                                                                      5 (83%)              1 (17%)
  oxygenation of oxidation
                                           Food, Beverage & Tobacco
  processes. Water                                                                                                    8 (67%)   1 (8%)                     3 (25%)
  treatment is getting more                Industrial & Manufacturing
  and more important.”                                                                                                                   12 (86%)          2 (14%)

                                           Metals & Mining

 Air Liquide                                                                                                                                    13 (93%) 1 (7%)

                                           Oil & Gas

                                                                                        5 (42%)                                       5 (42%)              2 (16%)

                                           Pharmaceuticals & Biotechnology

                                                                             5 (36%)                                                                       9 (64%)

                                           Retail, Consumer Discretionary & Consumer Staples

                                                                                                  8 (50%)                                  6 (38%)         2 (13%)

                                           Technology & Communications

                                                                                                  7 (54%)                                        5 (38%)     1 (8%)

                                           Utilities

                                                                                           6 (46%)                                                         7 (54%)

                                           Total

                                                                                                                 76 (62%)
                                                                                                    Percentage response rates                37 (30%)       9 (7%)

                                           0%          10%         20%          30%          40%           50%         60%      70%        80%        90%      100%

                                           ■ Yes ■ No ■ Don’t know                                Percentage response rates

Water as an opportunity                    water infrastructure to support growing                               and retain top talent as a result of
                                           populations and to adapt to climate                                   reputational strength, and these are
Perhaps the most encouraging theme         change (e.g. flood defense and                                        likely to become more pronounced as
arising from the disclosures is that       stormwater systems).                                                  water challenges intensify.
62% of respondents already recognize
the opportunities that water presents.     While the financial savings from better                               Recognition of the
Sectors reporting the greatest             water management may be dwarfed
                                           by revenues, they impact directly on                                  energy-water nexus
opportunities are Metals & Mining
(93%), Chemicals (88%), and Industrial     a company’s bottom line and can
                                           thus be a powerful lever for improving                                It is also encouraging that 72% of
& Manufacturing (86%). Examples
                                           profitability. Companies’ appreciation                                respondents, including at least 50%
include improved water management
                                           of this may have arisen from their                                    respondents from each sector, have
practices leading to reduced operating
                                           experience with carbon management                                     identified linkages and tradeoffs
costs (e.g. for mines and industrial and
                                           or from a more general appreciation                                   in their management of water and
manufacturing processes), increasing
                                           of the business case for sustainability.                              energy. Reductions in the use of
urbanization and population growth
                                           Companies are already seeing a                                        water often – but not always – result
expanding the market for water
                                           range of benefits from stronger                                       in reductions in the use of energy.
treatment chemicals (particularly in
                                           balance sheets to the ability to attract                              The widespread recognition of this
Asia), and a growing demand for

16
Sector overview

fact stands companies in good stead                                “We fully understand the linkage                      “Devon is constantly
as they construct resource efficiency                              between water and energy. As a power
management plans that reflect the                                  generator, AEP uses large quantities                    reminded and aware of the
interdependence of various inputs,                                 of water to produce electricity. New                    fact that there is a close
and the opportunities for savings in                               technologies being developed, such as
multiple areas through single projects.                            carbon capture and storage, will also                   linkage between energy
                                                                   require large amounts of water. These                   production and water.
“Climate change and energy are                                     are issues we will have to address.”
inextricably linked. Water issues                                  American Electric Power Company                         Our business economics
must be framed in the wider context,                                                                                       and production potential
including issues of material efficiency;
availability of safe, clean water                                                                                          are often interrelated to
and sanitation; reducing travel and                                                                                        the volume of produced
transport; supply chain accountability;
healthcare innovation; and                                                                                                 fluids that ultimately must
infrastructure improvement.”                                                                                               be disposed of. If our
Astra Zeneca
                                                                                                                           ratio of produced water to
                                                                                                                           energy yielded begins to
                                                                                                                           increase, operating costs
Fig. 9: Companies identifying linkages between the management
of water and energy                                                                                                        may increase to a point in
                                                                                                                           which a well may become
Chemicals
                                                                                                                           uneconomic to produce.”
                                                                                  6 (75%)    1 (12.5%)     1 (12.5%)

Construction, Infrastructure & Real Estate
                                                                                                                         Devon Energy
                                                    3 (50%)                                                  3 (50%)
                                                                                                                         Corporation
Food, Beverage & Tobacco

                                                                                 9 (75%)                     3 (25%)

Industrial & Manufacturing

                                                                                     11 (79%)                3 (21%)

Metals & Mining

                                                                           10 (71%)                          4 (29%)

Oil & Gas

                                                                        8 (67%)                              4 (33%)

Pharmaceuticals & Biotechnology

                                                                                            12 (86%)         2 (14%)

Retail, Consumer Discretionary & Consumer Staples

                                                           9 (56%)                              5 (31%)      2 (13%)

Technology & Communications

                                                                                            11 (85%)         2 (15%)

Utilities

                                                                          9 (69%)                            4 (31%)

Total

                                                                             88 (72%)
                                                                Percentage response rates                 31 (26%)   3

0%          10%         20%          30%       40%           50%         60%         70%        80%        90%   100%

■ Yes ■ No ■ Don’t know                             Percentage response rates

                                                                                                                                                        17
CDP Water Disclosure

     Geographical overview

The target sample comprises 302          Fig. 10: Number of responding companies and response rates by country
companies from a total of 34 countries
with responses received from 25 of
these. There is a heavy weighting        US
                                                                                         59 (57%)
towards the US which accounts for        UK
35% of the total sample and 39% of                                                                14 (64%)
the responses received, with 59          Japan
responses and a 57% response rate.                                      13 (45%)
The next best represented countries      Germany
                                                                                                                           10 (83%)
are the UK with 14 responses (a 64%
                                         Canada
response rate), Japan with 13 (a 45%                                                              8 (62%)
response rate) and Germany with 10       France
(an 83% response rate). All South                                     7 (37%)
African companies in the target sample   Switzerland
                                                                                                               5 (71%)
responded, with Germany (83%) and
                                         Australia
Switzerland (71%) also achieving                                                                      4 (66%)
particularly strong response rates.      Brazil
                                                                                   3 (50%)
The nine countries with companies        China
                                                        3 (16%)
included in the target sample from
                                         India
which there were no responders are                                    3 (38%)
Chile, Czech Republic, Malaysia,         Italy
Mexico, Norway, Poland, Russia,                                                               3 (60%)
Singapore and Thailand.                  South Africa
                                                                                                                                      3 (100%)
                                         Spain
                                                                      3 (38%)
                                         Netherlands
                                                                        2 (40%)
                                         Belgium
                                                                                                                                      1 (100%)
                                         Bermuda
                                                                                                                                      1 (100%)
                                         Colombia
                                                                                                                                      1 (100%)
                                         Denmark
                                                                                                                                      1 (100%)
                                         Finland
                                                                                   1 (50%)
                                         Ireland
                                                                                                                                      1 (100%)
                                         Israel
                                                                                   1 (50%)
                                         Portugal
                                                                                   1 (50%)
                                         South Korea
                                                            1 (25%)
                                         Sweden
                                                                                   1 (50%)
                                         0%          10%      20%     30%       40%         50%         60%          70%        80%   90%   100%
                                                                                   Percentage response rates

18
Geographical overview

Figure 11 highlights key statistics on the    that their own operations are exposed
management of water and exposure              to water risk. South African and UK
to risk for each country represented by       companies lead in setting performance
more than one public respondent. It           targets and in their ability to identify
focuses on the number of respondents,         whether their operations are located in
the proportion that has set targets, the      water stressed regions. Interestingly,
proportion able to identify whether their     companies from these two countries and
operations are located in water scarce        India were most likely to report water-
regions, and the proportion reporting         related risks to their operations.

Fig. 11: Key facts by geography

              Canada
               7 0% 100% 48%
                  USA
                                                       Germany
                  50 60 % 80% 35%
                                                        7 57% 100% 43%

                                      United Kingdom
                                      13 85% 100% 64%

                                         France
                                          5 80% 80% 7%                                                    Japan
                                     Spain                                                                 7 57% 100% 52%
                                      3 66% 100% 56%
                                     Switzerland                                                          China
                                      5 40% 100% 33%                                                       2 50% 100% 67%

                                    Italy
                                      2 0% 50% 17%

                                                                              India
                                                                                3 67% 67% 67%

                                              Brazil
                                               3 50% 100% 50%

                                                         South Africa
                                                          3 100% 100% 78%                       Australia
                                                                                                 4 50% 100% 50%

Key
 A    B   C   D

A Number of public respondents

B	Percentage setting efficiency or
   quality targets

C	Percentage able to identify whether
   their own operations are located in
   water stressed areas

D	Percentage identifying risks to their
   own operations (average of physical,
   regulatory and other risks)

                                                                                                                          19
CDP Water Disclosure

      South Africa focus

South Africa’s available freshwater                            The country’s total renewable water         How exposed is South Africa to
resources are already almost fully-                            resource is 1,048 m3 per person or          climate change?
utilized and under stress. At current                          about 13% of the global average of
projected population growth and                                8,210 m3 per person. A country is           Although the overall impact of climate
economic development rates, it is                              said to experience “water stress” when      change on water resources is uncertain
unlikely that the growth in demand for                         annual water supplies drop below            and will vary significantly from region to
water resources in South Africa can                            1,700 m3 per person. When this level        region, evidence suggests that average
continue to be met. Water thus has                             falls to between 1,700 and 1,000 m3         temperatures in South Africa will rise
the potential to become the limiting                           per person, periodic or limited water       and rainfall patterns will change.
resource to the country’s economic                             shortages can be expected. When             These changes are likely to result
development. This section examines                             annual water supplies drop below            in greater evaporative losses from
South Africa’s water resources, how                            1,000 m3 per person, the country            dams and soils, and a greater risk of
they might be affected by climate                              faces water scarcity. Coupled with          algal blooms. Reduced freshwater
change, the legislative context, and                           this, South Africa uses about 25% of        flow in rivers will also reduce the
how business in South Africa is                                its renewable freshwater resources          size of estuaries and be harmful to
beginning to respond to the challenge.                         per annum, with use in excess of 10%        their ecosystems (and therefore the
                                                               typically seen as a cause of water          populations that rely on them), and
Water in context – how does                                    stress in a given locality.                 will reduce the dilution of wastewater
South Africa fit into the global                                                                           discharged into rivers. This, in turn, will
water picture?                                                 Water resources are amalgamated into        increase the already intense pollution in
                                                               19 Water Management Areas (WMAs)            the coastal zone.
South Africa is an arid country with                           across the country. A significant
only 8.6% of annual rainfall becoming                          amount of water is transferred between      Recent studies have shown that South
available as surface water, one of the                         these WMAs and also from South              Africa could face a water supply gap
lowest conversion ratios in the world.                         Africa’s neighbors. Inter-Basin Transfer    of between 17% and 25% by 2030
This runoff is unevenly distributed                            (IBT) of water has long been seen as        assuming that water withdrawal for
both geographically and over time,                             the solution to water scarcity in South     irrigation does not increase. South
with great annual variability in rainfall.                     Africa, and of the nine provinces           African agriculture and municipal
South Africa’s groundwater resources                           whose water supplies are bolstered by       water supplies are highly dependent
are also relatively limited compared to                        transfers, eight are reliant on IBT for     on rainfall, but current models indicate
global averages.                                               more than 50% of their annual supply.       that climate change will lead to lower
                                                               It has been reported that Gauteng           average rainfall and a reduction in
This water scarcity and unpredictability                       Province, which supports around             water availability of approximately 10%.
is compounded by the pollution of                              25% of South Africa’s population            Given the importance of South Africa’s
surface- and ground-water resources                            and generates around 10% of the             agricultural sector to food security
by industrial effluents, domestic                              economic output of the entire African       in Southern Africa, any reduction in
and commercial sewage, acid mine                               continent, is 100% reliant on IBT for its   rainfall could have serious implications
drainage, agricultural runoff, and litter.                     water supply.                               for the region. South Africa is clearly
                                                                                                           highly sensitive to climate change
                                                               South Africa is looking to other            impacts, and management of the
                                                               countries such as Lesotho to help           existing supply will be key to mitigating
                                                               meet its projected demand for               the impacts of rising temperatures.
1.	The Market as a Driver or Constraint in the Move Towards
    Renewable Energy in Southern Africa, Touchstone
                                                               water, though there are clearly risks
    Resources, July 2009.                                      associated with dependence on extra-
2.	Inland Water: Background Research Paper produced for
    the South Africa Environment Outlook report on behalf of   territorial supply of arguably the key
    the Department of
3.	Environmental Affairs and Tourism, SRK Consulting,
                                                               national resource.
    October 2005.
4.	Nedbank Sustainability Outlook, Edition 1, Nedbank,
    August/September 2010.
5.	The Market as a Driver or Constraint in the Move Towards
    Renewable Energy in Southern Africa, Touchstone
    Resources, July 2009.

20
South Africa focus

What is the legislative framework          The following companies either register themselves as South African
around water in South Africa?              in the response, or are listed on the Johannesburg Stock Exchange:

Since 1994, there has been significant
progress in the development of South            Companies from target sample                                   Volunteers
African policy and legal frameworks
regarding water resources. The
National Water Act stipulates that                           Anglo American                                      Eskom
the government is the trustee of the                          Anglo Platinum                                Exxaro Resources
nation’s water resources and that
                                                            AngloGold Ashanti                                Impala Platinum
it must act in the public interest to
ensure that water is “protected,                      British American Tobacco                                  Nedbank
used, developed, conserved,                                       SABMiller                                 Northam Platinum
managed and controlled in a
                                                                       Sasol                               Woolworths Holdings
sustainable and equitable manner
for the benefit of all persons”. It also
recognizes the limits to the proposed
                                           All eight publicly responding companies               This vulnerability is further reflected by
solutions of constructing new dams
                                           (shown in blue above) reported that                   the fact that all but one company (88%)
and increasing water transfer,
                                           their own operations are susceptible                  reported having suffered a detrimental
and strongly advocates demand
                                           to significant physical risks (compared               impact from water in the last five
management approaches. Finally, the
                                           to 48% of global respondents). Six                    years (compared to 39% globally).
act makes a provision for a “reserve”
                                           (75%) also reported significant physical              These impacts include flooding, water
of water “to protect the ecological
                                           risks to their supply chain (compared to              shortages leading to power cuts and
functioning of aquatic ecosystems
                                           35% of global respondents), illustrating              interruptions to supplies of key inputs.
before water uses such as industry
                                           that the vulnerability is widespread and
or agriculture can be authorized”.
                                           acknowledged by procuring companies.
South Africa’s main approach
to addressing water issues is              Risks Identified
one of integrated water resource           0%         10%         20%          30%       40%   50%    60%       70%      80%       90%   100%
management. A key principle of this
                                           Physical Risk (Own Operations)
is the need to balance protection
                                                                                                                                          8
of water resources with social and
economic development, and the only         Regulatory Risk (Own Operations)
two guaranteed entitlements to water                                                                              6                       2
are for the ecological reserve and to
                                           Other Risk (Own Operations)
meet basic human needs.
                                                                                                       5                                  3
South African companies’                   Physical Risk (Supply Chain)
responses to CDP Water                                                                                            6            1          1
Disclosure
                                           Regulatory Risk (Supply Chain)

The South African response to CDP                                                                      5                       2          1
Water Disclosure has been extremely        Other Risk (Supply Chain)
positive, with all six of the 302 target
                                                                                     3                                         4          1
companies listed on the Johannesburg
Stock Exchange submitting responses,       ■ Yes ■ No ■ Don’t know
and a further six South African
companies responding on a purely
voluntary basis. The fact that almost a
quarter of all voluntary submissions
have come from South Africa indicates
how seriously the issue is felt. Of
these 12 companies, eight responded
publicly and are included in the
following analysis.

                                                                                                                                          21
CDP Water Disclosure

“In March 2009, we           However, the challenging environment                           “Our water strategy is based on the
                              facing South African companies has                             5Rs (pRotect, Reduce, Reuse, Recycle
  launched The Anglo          prompted a stronger response than                              and Redistribute), a comprehensive,
  Environment Way             seen elsewhere. All of the respondents                         risk-based approach to managing
                              have a water policy, strategy or                               water in our business and in the
  (AEW), which sets out a     management plan which falls under                              value chain. This model provides a
  consistent approach to      the direct oversight of the board or                           consistent approach, recognizing
                              a subset thereof. Further, 88% of                              the different local issues and
  responsible environmental   respondents have set a specific water                          circumstances faced by each of
  management, supporting      target (compared to 59% globally),                             our businesses.”
                              although all but one of these targets                          SABMiller
  our vision for minimizing   is efficiency related and none seeks
  harm to the environment     the absolute reduction in water use                            “Northam endeavors to run a zero
                              that will be vital to the successful                           discharge operation and closely
  by designing, operating     management of the country’s water                              monitors any potential impacts
  and eventually closing      resources. Nevertheless, the indication                        of its operations on surface and
                              is that South African companies                                groundwater sources.”
  all of our operations       are alert to water challenges and                              Northam Platinum
  in an environmentally       are putting in place the necessary
                              management structures.
  responsible manner. The
  Anglo Environmental Way     It is clear that South African companies
                              are evaluating water risks with an eye
  includes 10 performance     to extracting the opportunity as 88%
  standards, which apply      identify water-related opportunities
                              (compared to 62% globally). In South
  to all managed activities   Africa, these opportunities range from
  across the world. One       infrastructure improvement projects to
                              increased recycling and wastewater
  of these is a Water         reclamation in mining operations.
  Performance Standard.”
                              Response Summary
 Anglo American               0%        10%          20%           30%        40%          50%      60%   70%    80%       90%   100%

                              Water Policy, Strategy or Plan in Place

                                                                                                                                  8

                              Board /Executive Body Oversight of Water Policies

                                                                                                                                  8

                              Specific Water Target Set

                                                                                                                       7          1

                              Provided a Figure for Total Water Withdrawal

                                                                                                                                  8

                              Provided a Figure for Recycling /Reuse

                                                                                       4                                          4

                              Provided Details of Actions Undertaken in Own Operations and Beyond

                                                                                                                                  8

                              ■ Yes ■ No

22
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