CDP launches global water disclosure initiative

Investors will be able to evaluate companies' exposure to water shortages, an expected impact of climate change, under a new "water disclosure project" launched by the Carbon Disclosure Project (CDP) last month.

"Much of the impact of climate change will be felt through changing patterns of water availability," CDP chief Paul Dickinson said. "If climate change is the shark, then water is its teeth and it is an issue on which businesses need far greater levels of awareness and understanding."

The UN forecasts that by 2030 almost half of the world's population will live in areas facing water stress. Companies could see water shortages impacting manufacturing processes and new regulations increasing water prices, according to the CDP.

The CDP will from next year ask companies to measure and disclose figures on water usage. Firms will also be asked to identify water-related risks and opportunities in their own operations and supply chains.

"It is vital that institutional investors have access to high quality information on how water-related risks threaten corporations, both directly and within their supply chains, to make better informed decisions and direct the flow of capital away from risks," said Norges Bank Investment Management (NBIM), the project's lead sponsor.

In 2010, the CDP will send a questionnaire to 300 of the world's largest companies in water-intensive sectors including chemicals, fast moving consumer goods (FMCG), food and beverages, mining, paper and forest products, pharmaceuticals, power generation and semi-conductor manufacturing.

It will publish a first annual report in the last quarter of 2010. Data from a small pilot project in 2008 shows that most companies have figures on their own water usage, but not that of their suppliers, and only half see water as a risk.  The findings from the project are presented in the recent report 'The case for water disclosure'.

Hilary Benn, Secretary of State for the UK Government's Department of Environment, Food & Rural Affairs (DEFRA), said: "I welcome the Carbon Disclosure Project's initiative to raise awareness of the importance of water and the opportunities there are to improve water management. I am sure that as with carbon disclosure this will help us to understand water usage and as a consequence value this precious resource."

To download the report 'The case for water disclosure' click here.

For more information, visit the Water Disclosure Project website.

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