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Water Woes Hit Gap, Kraft, Nestle, MillerCoors

Companies including Gap, Kraft and MillerCoors are all dealing with financial hits from water shortages and floods, according to news reports.

The Gap cut its profit forecast by 22 percent after the Texas drought killed much of the year’s cotton crop, Reuters said. Kraft, Sara Lee and Nestle have all announced plans to raise product prices after droughts and floods drove up commodity prices.

And stocks of gas company Toreador Resources fell 20 percent after France banned fracking, in large part because of concerns over water quality.

These stresses look set to intensify. On Tuesday, the World Resources Institute said that water consumption has been growing over twice as quickly as the global population. The report raised alarm bells as the world population races towards the 7 billion mark, which the UN estimates will happen on October 31.

In the Guardian, MillerCoors head of corporate social responsibility Kim Marotta said the company has had to put “considerable funds” into water-related projects that don’t offer the kinds of returns on investment the company looks for, simply because the initiatives are  necessary to keep the business going. In one major investment, the company recently bought a new pasteurizer water reclaim system that it says will save up to 20 million gallons a year.

MillerCoors is also working with farmers to reform their irrigation practices. It has created a “showcase farm,” in collaboration with the Nature Conservancy and an Idaho farmer, and plans to invite all 500 of its suppliers there.

Although one of its parent companies, SABMiller, reported an eight percent improvement in water efficiency from 2008 to 2010, MillerCoors’ water-to-beer ratio has remained constant. The company has a goal of reducing the ratio by 15 percent to 3.5:1 by 2015.

Meanwhile, much of Bangkok lies under water, with the threat of more to come, as major manufacturers in the country continue to deal with flooding at their factories.

Today Toyota said it will suspend production at its North American plants for one day this Saturday, because of a shortage of components from Thailand, MarketWatch reported. According to the Bangkok Post, Toyota also said its production in Japan is slowing down, as plants there rely mostly on parts from Thailand.

And Honda is postponing the Japanese launch of its redesigned Life Diva car because of the parts shortage.

Honda and Toyota stopped all production in Thailand last week as the floods ripped through industrial parks. Hundreds of factories shut down, putting over 100,000 out of work.

Picture credit: Mundoo

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2 thoughts on “Water Woes Hit Gap, Kraft, Nestle, MillerCoors

  1. There are no “externalities” only unaccounted for risks and costs. As the hydrological cycle accelerates, leading to more intense droughts, floods, storms and fires, companies will have to insure against unpredictable yet catastrophic loss. The International Integrated Reporting Committee of the Prince of Wales and the American Institute of Certified Public Accountants are addressing the need for bringing environmental and social responsibility factors in to a consolidated financial annual report. Sustainable Silicon Valley’s WEST Summit (Water, Energy and Smart Technology) will be addressing the issue of Climate Risk, Global Trade and Regional Resilience. The conference will be exploring both challenges and solutions. Conversations will continue on the EcoCloud ™ website.

  2. The private sector has remained largely aside from conversations around climate change. The fact is that they are much more needed than “official” help from governments or international institutions. The investment gap for Adaptation alone leaves a hole of 90% unfunded needs.

    This article points out an array of real world examples of consequences of not addressing these issues. Social responsibility, securing the supply chain, securing the life of their staff, preparing for shifting markets, confronting new hazards, … are all valid reasons to engage the private sector.

    Now, what is needed is independent relevant data to help make decision and inform of the risk and situation. Why a country is vulnerable to what. How ready is the country or sector to face these risks?

    Fortunately, this is already ramping up. and this is good news in the midst of the usual apocalyptic view.

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