Multinationals and Water: Low or High Tide?

KPMG analyses water reporting of multinationals
Multinationals and Water: Low or High Tide?
Publ. date 20 Dec 2012
Water is an important social issue and still many people lack access to water. According to the Water Resources Group, the global water demand exceeds total water supply with 40% in 2030. And the WHO stated that water scarcity affects 1 in 3 people on every continent of the globe. The largest multinationals on the planet therefore have a large impact on the topic of water scarcity. What actions are these companies taking to reduce their water use? How do they communicate and which sectors are reporting the most on water issues?

KPMG conducted a frequency analysis of the CSR reports from the 250 largest companies in the world in order to look how these companies are reporting on water issues.

Increased pressure from public sector and investors

More and more governments are introducing new rules for companies to use water more efficiently and also pressure is increasing from investors and consumers to start working on the topic. China for example, announced that water intensive industries are going to pay more for water, a statement that was also highlighted at the RIO+20 conference. And more than 250 institutional investors, who together manage a total assets worth over USD 43 trillion, are supporting Carbon Disclosure Project’s Water Survey. Multinationals cannot ignore the topic anymore and have to think about new business models.

Do multinationals report on water?

KPMG analyzed the CSR reports of companies from 34 countries which resulted in a number of interesting findings. 76% of the 250 largest multinationals are reporting on water related topics, but only 44% mentions specific targets to reduce their water usage. When looking at the entire supply chain, the numbers are even worse: only 3 companies are reporting on the water footprint in the supply chain and not a single company report on the entire supply chain. Disturbing figures especially since there is much more water used in the supply chain than in direct operations.

Sectors that are reporting the most on water are mining companies and pharmaceutical companies (100%), electronics (95%), and oil and gas companies (92%). A sector that reports less on water is the food and beverages sector, a sector where water is a very material issue.

The KPMG research shows that although water is becoming more and more material, many leading companies are taking insufficient actions to prevent inefficient water use. To improve investor relations, a clear approach with strong targets is necessary on the topic. An approach that not only focuses on own business activities, but also includes the entire supply chain. 

Making the business model more sustainable

Finch & Beak is helping leading companies to map material issues and re-design existing business models. Finch & Beak developed a special process tool, called GLOBE-US, to design sustainable business models. For more information on GLOBE-US and how this might help your company, contact Jan van der Kaaij, managing partner, at jan@finchandbeak.com or +31 76 522 28 17. 

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