Two-thirds of the world’s largest companies are exposed to water risks, some of which have the potential to limit their growth.
According to the Global Water Report 2014, produced by international non-governmental organisation CDP, some 68% of businesses report exposure to water risk, which could generate a substantive change in their business, operations or revenue.
Meanwhile, nearly a quarter (22%) of companies anticipate that issues around water could limit the growth of their business.
In addition, the report highlights that water pressures will be most keenly felt in emerging markets where companies see new opportunities for growth, such as Brazil, China, India and Mexico. Brazil’s biggest city, São Paulo, is widely reported to be dangerously close to running out of water.
The news comes amid mounting shareholder concern around the business impacts from water scarcity, accessibility and poor water quality.
CDP’s analysis is based on the water management data of 174 companies listed on the FTSE Global 500 Equity Index. The number of investors pressing for corporate accountability on water and related information through CDP has increased by more than 300% since 2010, reflecting growing shareholder attention to water challenges.
Three-quarters of companies are evaluating how water quality and quantity affects their growth strategy. This change comes as water increasingly moves from being an operational issue to a boardroom concern. Ultimate responsibility for water issues lies at board level in 62% of respondents, up from 58% in 2013. Meanwhile, the vast majority of companies (90%) are integrating water into their group-wide business strategies and 82% are setting goals and targets to reduce water use.
Paul Simpson, chief executive officer at CDP, said: “Water is an essential resource for any business. The potential for water-related problems to damage brand value or limit corporate growth is increasingly understood. We live in a time of unprecedented demand for water and have seen the number of investors seeking accountability from companies on this issue through CDP rise more than fourfold in just four years.”