Environmental Leader

The Carbon Disclosure Project (CDP) has launched a global water disclosure project to help businesses and institutional investors understand the risks and opportunities associated with water scarcity and other water-related issues, including greater demand for water, shrinking glaciers and changing precipitation patterns that are likely to result in drought and flooding. The organization also released a new report that details the new program and findings of a small pilot program in 2008.

Similar to the Carbon Disclosure Project that asks the world’s largest corporations to measure and disclose their greenhouse gas emissions and strategy for dealing with climate change, and the new Forest Footprint Disclosure Project that requests corporations to disclose their activities and supply-chain practices that lead to tropical deforestation, CDP Water Disclosure will ask companies to measure and disclose information on water usage, the risks and opportunities in their own operations and supply chains as well as their water management and improvement plans.

This will provide a system for businesses to report their use of water and their exposure to changing patterns of water availability.

The Carbon Disclosure Project has been able to influence the global supply chain. In developing its sustainability index, Wal-Mart is leaning on Carbon Disclosure Project results to a degree.

CDP says water scarcity can impact agricultural and manufacturing processes by limiting the volume of water available to them as well as impact regulatory risks and pricing.

The report, “The case for water disclosure” (PDF), written by Irbaris, indicates that less than 1 percent of the world’s water is easily accessible fresh water and the effects of climate change, increasing population, urbanization, per capita demand, and pollution damage to supplies will put greater pressure on these resources. The United Nations (UN) forecasts that by 2030 almost half of the world population will live in areas facing water stress or water scarcity, according to the report.

A recent report from CERES also indicates that businesses and investors are not taking into consideration the economic impact if water resources became scarce as projected, which will also drive the public to more intensely examine corporate water-use practices.

The CDP Water Disclosure project already has support from several major financial institutions including NBIM, Schroders, APG Asset Management and Dexia Asset Management. Investors say it is important to have information on how water-related risks impact corporations including their supply chains in order to make better informed decisions.

In 2010, CDP Water Disclosure will send a questionnaire to approximately 300 of the world’s largest corporations in water intensive sectors including chemicals, fast moving consumer goods (FMCG’s), food and beverage, mining, paper and forest products, pharmaceuticals, power generation and semiconductor manufacturing.

Survey results will be made available to endorsing investors and summarized in an annual report in the fourth quarter of 2010.