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Big companies neglecting water perils

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Energy firms are among the worst offenders as the world's largest corporations overlook the serious challenges of water scarcity, pollution and flooding, according to a Deloitte-backed report.

Shanghai's corporate scene along the Huangpu River. China is not the only water culprit.

Many of the world’s largest corporations are overlooking critical water-related perils like pollution, scarcity, over-exploitation and flooding, with energy companies among the worst offenders.

That’s the conclusion of a joint survey of FTSE Global 500 companies by the Carbon Disclosure Project (CDP) and consultants Deloitte Touche Tohmatsu. The survey found that only 59 percent of 190 respondents conduct board level oversight of water risks.

By comparison, 94 percent of Global 500 companies give board level oversight to climate change, a September CDP survey showed.

Corporate understanding of water as a business concern trails that of climate change,” concludes the new report, called the CDP Water Disclosure Project. Presumably, companies paying attention to climate change would also monitor things like flood potential, but the water survey shows that companies give short shrift to water management.

Energy companies reported some of the highest levels of water risk, yet showed the lowest level of board oversight, according to CDP, a London-based non-profit climate and energy monitoring group.

Water not only poses social and ethical responsibilities, but also, as the report notes, can impact a company’s profits as events such as flooding disrupt operations and supply chains, and as water abuse damages corporate reputations.

“Some of the largest multinational companies have experienced the detrimental effects that water can have on their bottom line,” said Paul Simpson, CDP’s CEO. “The findings released today illustrate the very near-term nature of water-related impacts. We need to see more companies understand that water is a critical issue, requiring greater board-level attention than it currently receives.”

CDP and Deloitte revealed the results of the survey yesterday in London.

“Water is a precious resource and the importance of protecting local supplies should not be underestimated at a management or board level,” said Michael Glade, director, water resources & real estate at brewer Molson Coors.

Additional water "stress" issues that companies are ignoring include eutrophication (the growth of biomass in fresh water) and saline intrusion, the CDP  said.

Photo: Jakub Halun via Wikimedia

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Mark Halper

Contributing Editor

Mark Halper has written for TIME, Fortune, Financial Times, the UK's Independent on Sunday, Forbes, New York Times, Wired, Variety and The Guardian. He is based in Bristol, U.K. Follow him on Twitter. Disclosure