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Anheuser Busch, Coca-Cola, PepsiCo and Intel Link Climate Change to Water Risk, Ceres Study Finds

Anheuser-Busch InBev, Coca-Cola Company, PepsiCo, KB Home, Alcoa and Intel are among the 27 percent of companies assessed that made the connection between climate change and water risk in 2011, up from 10 percent in 2009, according to a report from Ceres.

The study, Clearing the Waters: A Review of Corporate Water Risk Disclosure in SEC Filings, analyzed changes in water risk disclosure by 82 companies — including Diageo, Dow, DuPont, Exxon-Mobile, Conoco Philips, AMD, General Mills and others — between 2009 and 2011, covering water use in eight water-intensive sectors: beverage, chemicals, electric power, food, home building, mining, oil and gas, and semiconductors.

It found that while reporting has risen, data on financial impacts, quantitative water metrics and potential supply chain risks is lacking.

Companies disclosing water-related physical risks increased from 76 percent to 87 percent (see chart), according to the report. Oil and gas, and chemical companies’ reported exposure to physical water risks jumped to 31 percent and 45 percent, respectively. Additionally, the study found a 46 percent increase in the number of food companies reporting exposure to water-related risks.

The report says disclosure on water management systems and performance has grown over the three-year span, but it is still limited. It says Royal Dutch Shell discloses setting variable remuneration measures for executives based on sustainability indicators, including fresh water use. Brown-Forman, an alcoholic beverage company, discloses a process for assessing risks related to water availability and quality, and Rio Tinto reports on its investments to improve water quality monitoring near its Australian mines.

Companies infrequently disclose data on their water use and financial impacts of water-related risks, the study found. It gives examples of disclosure: Anheuser-Busch InBev’s efforts to reduce water use to 3.5 hectoliters of water per hectoliter of beer and soft drinks produced, and Suncor’s goal to reduce total water intake 12 percent by 2015.

Of the 11 food companies evaluated, Archer Daniels Midland, Bunge, PepsiCo and Smithfield were the ones with water-related supply chain risk disclosures that mentioned specific agricultural commodities or regions facing water risk, or discussed climate-change impacts on their supply chains, Ceres says.

The Coca-Cola Company, Pepsico, Levi Strauss & Co., Royal Dutch Shell, Unilever and 40 other international companies agreed to set targets on their own water efficiency and wastewater management in factories and operations at the Rio+20 Corporate Sustainability Forum earlier this week.

In March, Ceres debuted a tool for assessing water-related risks, Ceres Aqua Gauge, designed to help companies improve water risk management while also helping investors to track and assess the water risk disclosure and management of companies in their portfolios.

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