CDP 2010 Water Disclosure Global Report

8/8/2019 CDP 2010 Water Disclosure Global Report

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CDP Water Disclosure 2010Global Report

On behal o 137 investors with assets o US$16 trillion

Report written forCarbon Disclosure Project by:

Carbon Disclosure Projectwww.cdproject.net+44 (0) 20 7970 [email protected]


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CDP Water Disclosure

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CDP Water Disclosure 2010 137 inancial institutions with assets

o over US$16 trillion were signatoriesto the CDP Water Disclosure 2010questionnaire dated April 1, 2010,including:

Aberdeen Immobilien KAG AEGON-INDUSTRIAL Fund Management Co., Ltd Alcyone Finance Allianz Group Amundi AM APG Group Aprionis

ARIA (Australian Reward Investment Alliance) ASM Administradora de Recursos S.A. AustralianSuper AVANA Invest GmbH Aviva InvestorsBank Sarasin & Co, LtdBanque DegrooBBVABlumenthal FoundationBoston Common Asset Management, LLCBritish Columbia Investment ManagementCorporation (bcIMC)British Columbia Teachers Federation SalaryIndemnity FundCAAT Pension PlanCaixa Econmica FederalCali ornia Public Employees Retirement SystemCali ornia State Teachers Retirement SystemCali ornia State TreasurerCalvert Group, Ltd.Canada Pension Plan Investment BoardCanadian Labour Congress Sta Pension FundCapital Innovations Water Investment PartnersCatherine Donnelly FoundationCbus Superannuation Fund

Central Finance Board o the Methodist ChurchCeres, Inc.Christian SuperChristopher Reynolds FoundationCM-CIC Asset ManagementColonial First State Global Asset ManagementCommerzbank AGCommInsureConnecticut Retirement Plans and Trust FundsCo-operative Financial Services (CFS)Corston-Smith Asset Management Sdn. Bhd.Daiwa Securities Group Inc.

DekaBank Deutsche GirozentraleDeutsche Bank AGDevelopment Bank o Japan Inc.Dexia Asset ManagementDomini Social Investments LLCElement Investment Managers

Environment Agency Active Pension undEpworth Investment ManagementEssex Investment Management, LLCEthos FoundationF&C Management LtdFdris Gestion dActi sFirst A irmative Financial Network, LLCFive Oceans Asset Management Pty LimitedFlorida State Board o Administration (SBA)FRANKFURT-TRUST Investment Gesellscha t mbHFukoku Capital Management IncFundao Atlntico de Seguridade SocialGartmore Investment Management LtdGenerali Deutschland Holding AGGLS Gemeinscha tsbank eGGOOD GROWTH INSTITUT r globaleVermgensentwicklung mbHGreen Cay Asset ManagementGreen Century FundsGROUPE OFI AMHenderson Global Investors, Sustainable &Responsible Investment (SRI) undsHermes Fund ManagersHESTA SuperHSBC Holdings plcINGJupiter Asset ManagementKB Kookmin BankKBC Asset Management NVKPA PensionLa Financire ResponsableLiving Planet Fund Management Company S.A.Local Authority Pension Fund ForumLocal Government SuperLothian Pension FundMaci GestionMcLean BuddenMergence A rica Investments (Pty) LimitedMeritas Mutual FundsMitsubishi UFJ Financial Group (MUFG)Mizuho Financial Group, Inc.Monega Kapitalanlagegesellscha t mbHNational Australia BankNational Bank o CanadaNational Pensions Reserve Fund o IrelandNeuberger BermanNewton Investment Management LimitedNH-CA Asset ManagementNissay Asset Management CorporationNordea Investment ManagementNorges Bank Investment Management (NBIM)Northern Ireland Local Government O icersSuperannuation Committee (NILGOSC)Northwest and Ethical Investments L.P.Oregon State TreasurerPax World FundsPension Protection FundPFA Pension

PhiTrust Active InvestorsPort olio 21 InvestmentsPSP InvestmentsQBE Insurance Group LimitedRailpen InvestmentsReal Grandeza Fundao de Previdncia e

Assistncia SocialRei SuperRLAMRobecoRobert Brooke Zevin Associates, IncRocke eller Financial Asset Management Group SRI GroupRoyal Bank o CanadaRREEF Investment GmbH

SAM GroupSanta F Port olios LtdaSchrodersSEBSeligson & Co Fund Management PlcSentinel InvestmentsSiemens Kapitalanlagegesellscha t mbHSNS Asset ManagementSocial(k)Sompo Japan Insurance Inc.Sopher Investment ManagementStandard Li e InvestmentsStatewide SuperannuationSuper und Asset Management GmbHSustainable CapitalSvenska Kyrkan, Church o SwedenSyntrus Achmea Asset ManagementThe Central Church Fund o FinlandThe Daly FoundationThe Pension Plan For Employees o the PublicService Alliance o CanadaThe Russell Family FoundationThe Westpac GroupThreadneedle Asset ManagementTokio Marine & Nichido Fire Insurance Co., Ltd.

Trillium Asset Management CorporationTriodos Investment ManagementUnion Asset Management Holding AGUNISON sta pension schemeUniSuperUnited Methodist Church General Board oPension and Health Bene itsVancityVicSuper Pty LtdVictorian Funds Management CorporationWaikato Community Trust IncWalden Asset Management, a division o BostonTrust & Investment Management CompanyWARBURG - HENDERSONKapitalanlagegesellscha t r Immobilien mbHWestLB Mellon Asset Management (WMAM)Winslow Management, A Brown AdvisoryInvestment GroupZurich Cantonal Bank


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Contents

ContentsCDP Water Disclosure Signatories 2010 2

Foreword 4

Executive summary 5

Corporate water sustainability in context 8

Sector overview 10

Geographical overview 18

South Africa focus 20

Best practice 24 Sector snapshotsChemicals 26Construction, Infrastructure & Real Estate 28Food, Beverage & Tobacco 30Industrial & Manufacturing 32Metals & Mining 34Oil & Gas 36Pharmaceuticals & Biotechnology 38Retail, Consumer Discretionary & Consumer Staples 40

Technology & Communications 42Utilities 44

Appendix: Target sample, voluntary responders 46


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ForewordPaul Dickinson, Executive Chairman Carbon Disclosure Project

Demand for water is projected to outstrip supply by a staggering 40 percent by 2030, and an estimated half the worlds populationare likely to live in areas of high water stress by the same year. The impacts on water resources of population growth, risingper capita demand and climate change are already being felt, albeit unevenly across different sectors and geographies. Theseimpacts will increasingly present risks from physical disruptions to operations and supply chains, changing regulatory regimes andreputational damage from misuse, or perceived misuse, of this shared, life-sustaining resource. But the changing availability of waterresources will also present opportunities to business through demand for new infrastructure, products and services. Now is the timeto start seizing these opportunities, addressing water challenges and building resilience not once the well has run dry.

So is water the new carbon? In the sense that water presents an equally pressing challenge to the long term sustainability of business, yes it is, and the need for greater transparency and access to high quality information to inform and improve decisionmaking is just as vital. As companies have repeatedly demonstrated with carbon, what they measure they manage. Thinkingabout challenges in a strategic way will enable them to mitigate risks and identify opportunities, putting companies in a far stronger

position to navigate a water-constrained world than would otherwise be the case.In other respects water is very different from carbon. Whereas sustainable alternatives to carbon do exist, for water there is nosubstitute. The challenge therefore lies in managing what we have among competing users, be they businesses, communities orecosystems. Those competing users or rivals (from the Latin for a neighbour who shares a stream) are linked by the geographyand politics of their local water systems, making water a local rather than a global management issue, even if its impacts can be feltacross the world through the displacement of populations and higher commodity prices.

CDP Water Disclosures goal is to make meaningful, systematic and comparable reporting on water a standard corporate practiceglobally, enabling investors, companies themselves, governments and other stakeholders to put this data at the heart of theirdecision making. More immediately, we seek to raise awareness and enhance understanding of water-related issues, and thisexcellent report by Environmental Resources Management (ERM) Ltd should do just that. We are also delighted to be workingwith our two lead sponsors, Molson Coors and Norges Bank Investment Management (NBIM) and with our project sponsor,Irbaris , and we wholeheartedly applaud all 175 companies at the vanguard of water disclosure that reported through us in our

inaugural year.

Paul DickinsonExecutive Chairman, Carbon Disclosure Project


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Introduction

CDP Water Disclosure replicatesand builds on the tried-and-trustedmethodology and process that theCarbon Disclosure Project (CDP) hasused for carbon and climate changesince 2003. Backed by 137 institutionalinvestors representing $16 trillion inassets, this year CDP sent its rstannual water questionnaire to 302 of the worlds 500 largest companies inthe FTSE Global Equity Index Series,focusing on sectors that are waterintensive or are particularly exposedto water-related risks.

Although water issues are as uniqueand varied as their local context,the overarching concern of water

management is access: whether theappropriate quantity and quality of water is available for competing humanusers and for environmental healthboth now and in the future. The CDPWater Disclosure questionnaire bringsinsight into the challenges that thispresents to companies by requestinginformation on their water strategiesand management plans, on their water-related risks and opportunities, and ontheir water use within the context of local scarcity or abundance.

This report 1, prepared byEnvironmental Resources ManagementLtd (ERM) analyses the responsesto the CDP Water Disclosure 2010questionnaire. Throughout this report,response rates re ect the full numberof responders while all other statisticsinclude only those companies thathave chosen to make their responsespublicly available. These responses areavailable to view at www.cdproject.net.

Highlights from2010 disclosures

The response rate among targetcompanies has been impressive for theprograms rst year. Of the 302 targetcompanies, 150 (50%) respondedto the questionnaire. A further25 companies also respondedon a purely voluntary basis 2.

The strong response rate in thisinaugural year is indicative of the highlevel of importance being placed onwater by global corporations acrosssectors and geographies.

Water has climbed high on thecorporate agenda. 67% of respondingcompanies report that responsibilityfor water-related issues lies at theBoard or Executive Committee level,while 89% have developed speci cwater policies, strategies, and plans.Encouragingly, 60% have set water-related performance targets.

Response rates vary widelybetween different sectors andgeographies. 100% of companies inthe Chemicals sector respondedcompared with just 29% in the Oil &Gas and Construction, Infrastructure &

Real Estate sectors. Responses werereceived from companies in a total of 25countries, with the highest number of responses coming from the US (59, 57%responding), the UK (14, 64% responding)and Japan (13, 45% responding), andthe highest response rates from South

Africa (100%), Germany (83%), andSwitzerland (71%).

Respondents have a good overallawareness of water risks and waterusage within their own operations,but much less knowledge of theirsupply chains. 96% of respondingcompanies were able to identify whethertheir own operations are exposed towater risks while just 53% were able to

do so for their supply chains. Sectorsreporting the greatest exposure to waterrisks are Food, Beverage & Tobaccoand Metals & Mining, while Chemicalsand Technology & Communicationsreport the least. There is a clearopportunity for improvement andfocused attention on supply chains inthe coming years.

Water is a current, not a future,corporate issue. The immediacyof water as a corporate issue washighlighted by the timescales associatedwith water-related risks, with morethan half of the risks identi ed acrossall categories (physical, regulatory andother) being classi ed as either currentor near-term (1-5 years), and 39% of companies already having experienced

detrimental impacts. These impacts fallinto the broad categories of disruptionto operations from drought or ooding(in one case resulting in $100 millionin remediation costs), declining waterquality necessitating costly on-sitepre-treatment, increases in waterprices, and nes and litigation relatingto pollution incidents.

Corporations are identifyinga wide range of water-relatedopportunities. Even in this earlyphase of water reporting, 62% of respondents identify signi cant water-related business opportunities. Widelycited examples include improvedwater management practices leadingto reduced operating costs (e.g. formines and industrial and manufacturingprocesses), increasing urbanizationand population growth expanding themarket for water treatment chemicals(particularly in Asia), and a growingdemand for water infrastructure to

support growing populations and toadapt to climate change (e.g. ooddefense and stormwater systems).

Executive summary

1. Please see the Important Notice on the inside back covero this report regarding its content and use.

2. The statistics reported only include responses romthe 302 targeted companies in order to ensure thatsubsequent reports compare a similar dataset. Bestpractice and other elements o the report also draw on the25 purely voluntary responses received rom companiesoutside the target 302 who are listed in the Appendix.


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This report does not rank or scorecompanies either on the quality of theirdisclosures or on their performance inwater management. However, it doescontain numerous examples of bestpractice from a wide range of companies, notably from the likes of

Anglo American, Colgate-Palmolive,Ford Motor, General Electric,PG&E and Taiwan SemiconductorManufacturing . These companies,and many others, have recognizedthe critical nature of water to theirbusiness and are taking steps onthe journey towards sustainablewater management.

Molson Coors Brewing Company commentary

Peter Swinburn, President & CEO

Plenti ul, resh water is what brought John Molson to the banks o theSt. Lawrence River in Montreal, Adolph Coors to Clear Creek in Golden,Colorado, and it was the waters beneath Burton-on-Trent that gave birth tothe British brewing industry we know today. Water is the #1 ingredient in beerand the quality o our beer is tied directly to the quality o the water we use toproduce it. Ensuring resh water as a sustainable resource is not just part oour heritage, it also plays a vital role in our uture.

As a global brewer with over 350 years o experience developing andimplementing real-world solutions or water use and conservation, we havelearned that solutions to global water issues are o ten locally based andrequire individuals, non-pro t organizations, and corporations to engageand collaborate in their watersheds and communities. We have also learnedthat transparency must serve as the cornerstone or stimulating integratedwatershed resource management.

Although many companies have increased their knowledge and transparencyaround operational water use, many still have work to do with respect towater usage across supply chains. At the same time, the cost savings andrisk mitigation opportunities inherent in closer evaluation o water use iscontributing to even greater ocus and action.

We are encouraged that CDP Water Disclosure has received such a strong

response rom companies in its inaugural year. This is an indication o thegrowing importance that companies and their investors are placing on waterissues. As we enter a new era o increased expectations around watermanagement and reporting, the growing interest that is building behindCDPs e orts is a valuable signal that we are moving collectively in theright direction.

Working with CDP on this issue is a logical next step or corporations that arecommitted to clean water and water sustainability. Its clear that collaborationand progress require working rom the same, reliable in ormation and CDPWater Disclosure is per ectly positioned to normalize best practice andmediate between investors and companies in valuing risks and opportunities.

As we move orward, companies must accept the responsibility or their owntransparency and join in this e ort to help advance what will hope ully emergeas a common water reporting standard bene ting all stakeholders.

On behal o Molson Coors, I want to congratulate CDP Water Disclosure ona very success ul rst year. We look orward to exploring new opportunities toencourage and support this critical initiative on behal o the key stakeholdersthat have a vested interest in the continued success o companies like ours,as well as the various communities where we operate globally.


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Norges Bank Investment Management (NBIM) commentary

Anne Kvam, Global Head of Ownership Strategies

NBIM is responsible or investing the assets o the Norwegian GovernmentPension Fund Global. NBIM uses its ownership rights to sa eguard the

unds assets by promoting good corporate governance and high social andenvironmental standards at companies it invests in.

As a diversi ed investor with a long-term outlook and investments in a rangeo sectors at risk rom increasingly scarce water resources, we take watermanagement seriously. Companies that ail to consider the impact o waterscarcity and other water-related risks pose a nancial risk to investments.

As lead partner in CDP Water Disclosure and with water management asone o our strategic ocus areas, NBIM is very pleased with the outcome othe projects rst questionnaire. The strong response rate suggests thatcompanies recognise water is a critical issue that needs to be dealt withpromptly and adequately. It also indicates that companies understand theimportance o disclosing and reporting on their water management.

Also encouraging is that many companies see water as a signi cant areao opportunity.

As expected, many companies have a good awareness o water-related risksin their own operations, but considerably less knowledge about risks in theirsupply chains. We hope this report will encourage companies to ocus moreon water management in the supply chain. Sustainable water management is

vital or the long-term per ormance o companies.

Irbaris LLP commentaryDavid Hampton, Managing Partner

Disclosure o environmental risks and opportunities is increasingly importantto many stakeholders and it is exciting to see the high level o response tothe CDPs inaugural Water Disclosure questionnaire, especially given howevents in the past 12 months have demonstrated the devastating social andeconomic e ects o both too much and too little water.

As is made clear in throughout this report, water issues are already creatingchallenges and opportunities or many businesses. One critical role ordisclosure is as a catalyst or change. Corporate actions on water arerequired on two levels. Clearly, companies should be taking steps to reducewater usage and water-related risks along their supply chain. They also needto consider how the ( uture) water constrained world could look and whatit could mean or customers, suppliers and communities in which thecompany operates.

Water disclosure is at an early stage and, although rapid progress isbeing made, much still needs to be done. We ully expect that CDP Water

Disclosure will become an essential source o in ormation and insight orinternal and external stakeholders to help catalyze companies to take thenecessary actions.

As both the worldpopulation and thedemand for clean waterare increasing, wateravailability is decreasingin some locations aroundthe world. For its part,Colgate strives to usethis natural resourcemore ef ciently and hasestablished water-relatedgoals to ensure we do so.Our strategy is company-wide and applies to allmanufacturing and R&Dsites around the world.

Colgate-Palmolive

Executive summary


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Corporate watersustainability in context

In November 2009, CDP publishedthe results of a Water Disclosure Pilotthat was undertaken as part of CDPSupply Chain in 2008. The reportnoted the growing issue of waterscarcity, and highlighted the limitedbusiness awareness of the issues,risks and opportunities associatedwith water. Only half of the respondentsviewed water as a signi cant risk fortheir business or their supply chain,and the majority of companies focusedlargely on water management issuesin their own facilities.

Since the 2008 Pilot, the focus oncorporate water management hasbeen strengthened in a range of ways.Firstly, in the last six to nine monthsthere have been a number of water-

related incidents that have served tomove the issue up the agenda. Themajor oods in China and Pakistanhave together resulted in almost$100 billion in damage to date. Shares in the Zijin Mining Group weresuspended from trading on the HongKong stock exchange on October4th 2010 in advance of disclosureof the penalties and clean-up costsassociated with the 2.4 million gallonacid spill into the Ting river in July2010. The Ajka aluminium waste spillin Hungary has now reached theDanube, having extinguished all lifefrom the Marcal river. Widespreaddrought conditions in China, Argentina,Russia and New Zealand havehurt pro ts in the agricultural andhydroelectric sectors. The businessimpacts of water issues are becomingincreasingly evident.

In addition, there has been a recentfocus on the notion and formalizationof water rights, evidenced by thedeclaration in July 2010 by the UnitedNations General Assembly that cleanwater and sanitation are a fundamentalhuman right. The declaration receiveda large amount of publicity and hasincreased the salience of water accessas an international political issue,illustrated by the Stockholm Statementthat emerged from World Water Week,and discussions around water in thecontext of funding for climate changeadaptation in advance of COP16 inCancun at the end of November 2010.

There is also growing evidence ofbroader corporate understandingof the water issue in terms of the

formalization of the link betweenwater and energy (or the water-energy nexus). The increasing focuson unconventional petroleum sourcessuch as oil shales, tar sands and coalseam gas, which require signi cantwater inputs during extraction andproduction and can also lead to thedischarge of signi cantly pollutedwastewaters, is a case in point.Global Water Intelligence for exampleestimated that it takes 11 barrelsof water to transport and separateeach barrel of bitumen from Canadiantar sands 2.

1. The statement urged the high-level Plenary Meeting on

the Millennium Development Goals to act upon theundamental roles o water resources, drinking water,

sanitation and water or all Stockholm InternationalWater Institute, 2010. http://www.siwi.org/sa/node.asp?node=1044

2. Global Water Intelligence, 21st January 2010. www.globalwaterintel.com/insight/how-can-we-meet-oils-growing-demand-water.html).

Typically water is a getinto business and/or stayin business requirement.

The mining industry isdependent on water, and

water is a nite resource.With water scarcityscenarios a looming threat,the identi ed opportunitieswill enable Anglo Platinumto continue with business-as-usual and enable long-term expansion plans.

Anglo Platinum


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The response of the corporate sectorto these various developments hasbeen varied, as demonstrated bythe 2010 CDP Water Disclosureresponses, but it generally recognizesthe increasing importance thatwater plays in an organizationslicense to operate, particularlyin areas that are water-stressedor that are likely to becomeso. Widespread business supportfor the various corporate waterinitiatives that have emerged in therecent past is a clear indicator of thisgrowing corporate interest in currentapproaches to water sustainability.

The work of organizations such asthe CEO Water Mandate, the Alliancefor Water Stewardship, and the newlyupgraded WBCSD Water Project arehelping to place business at the centreof the global response to the problemof water scarcity. The corporateresponse to water management hasalso led to the emergence of morein-depth methodologies for measuringand understanding organizational

water use.Businesses are increasingly realizingthat it is no longer suf cient to simplygather and report on water usage anddischarge volumes, but that there is anadditional need to further characterizethis water usage, by understandingboth the geography of usage, thenature of water sources and the scaleof overall impacts resulting fromabstraction and discharge. This ismost comprehensively achievedthrough the process of waterfootprinting, which allows acomprehensive assessment ofwater usage across a companysoperations within a de ned scope.

The concept of water footprintingemerged in the early 2000s from thework of Arjen Hoekstra at UNESCO-IHE and has been the subject of much discussion from a corporateperspective. While there have beencontroversies over the speci cs of theprocess, the establishment of an ISOworking group for the developmentof a water footprinting standard mayherald progress. This working groupseeks to establish a methodologywhich willallow users to understandthe water process more fully,identify the reduction pressurepoints within the process, andensure the comparability andaccuracy of the footprints.

Whilst progress in water accounting/ water footprinting has been uneven,a concept that has received signi cantgrowing support within the last yearis that of water stewardship. Thewater stewardship concept seeks tobroaden the focus of corporatewater sustainability away from

simply quantifying water usevolumes, to the active promotionof responsible water usage. Championed globally by the Alliancefor Water Stewardship the conceptis aimed at creating a program thatrecognizes and rewards water usersand managers who take major stepsto minimize the impacts of their wateruse and management.

The Carbon Disclosure Projectslaunch of CDP Water Disclosuremarks another signi cant milestonetowards improved corporate watermanagement. The program is buildingon an extremely effective blueprint,and the high level of engagementfrom companies in this inauguralyear suggests that it is well placedto serve as a driver for improvedwater measurement and managementand the global dissemination of bestpractice relating to water, and toprovide a reservoir of data and

knowledge to inform decisionmaking by investors, companies,governments and other stakeholdersin the coming years.

Climate Change andglobal warming couldreduce snow pack andrunoff volumes neededto support Hydro electricgeneration. This, in turn,is likely to raise the costof energy production.

Those costs could havea direct impact on the

nancial bottom line forthe company.

Air Products andChemicals

Corporate water sustainability in context


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Fig. 1: Number of responding companies and response rates by sector

10 (100%)

Chemicals

15 (63%)

Food, Beverage & Tobacco

Construction, Infrastructure & Real Estate

23 (49%)

Industrial & Manufacturing

15 (29%)

Oil & Gas

17 (81%)

Pharmaceuticals & Biotechnology

17 (49%)

Retail, Consumer Discretionary & Consumer Staples

16 (59%)

Metals & Mining

6 (29%)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

17 (59%)

Technology & Communications

14 (39%)

Utilities

Percentage response rates

Sector overview

Industries need clean,abundant, secure, andcompetitively pricedsources of water andhave a responsibility to

the public debate onwater policies thataffect industries.

Caterpillar

Introduction

There has been an impressiveresponse to the programs rstquestionnaire, with 150 (50%) of thetarget sample of 302 companiesresponding. Of these, a verycreditable 122 (81%) chose to maketheir responses publicly available.

Throughout this report, response ratesre ect the full number of responderswhile all other statistics include onlythose companies that have chosen tomake their responses publicly available.

In addition, 25 companies fromoutside the target sample respondedon a purely voluntary basis. Thesecompanies are not included in thestatistical analysis but examplesof best practice and other elementsof the report draw on their responses.

Sector response rates

A sector-by-sector comparisonprovides an insight into the particularchallenges and opportunities eachsector faces and the extent to whichthey are taking action. Certainly,response rates varied widely acrosssectors, with the rates for Chemicals(100%) and Pharmaceuticals & Biotech(81%) in stark contrast to those forOil & Gas (29%) and Construction,Infrastructure & Real Estate (29%).Given the importance of water to thesesectors, and their potential impacts onwater supplies, a greater commitmentto reporting would be desirable.


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Sector overview

Water targets and goals

Water is already high on the corporateagenda with 67% of respondentsreporting responsibility for water-related issues at the board or executivecommittee level, and 89% alreadyhaving developed water policies,strategies or plans. Encouragingly, 60%of respondents disclosed concreteperformance goals - which are essentialto improving water management - for arange of indicators including reductionsin use, quality of discharges, sustainabilityof supply (including river management),provision of safe drinking water tolocal communities and communityengagement. As illustrated in Figure 2,Food, Beverage & Tobacco (100%)are clear leaders while Oil & Gas (8%)perform particularly poorly.

The number of companies reportingabsolute targets for water reductionor water ef ciency targets is notable.Slightly more companies reportedabsolute targets (36) than ef ciencytargets (33), which is encouraginggiven that the former are generallymore onerous and are considered bestpractice, particularly in water-stressedregions. In many cases companiesreported both absolute and ef ciencytargets, which is why for sectorssuch as Food, Beverage & Tobaccothe combined number of companiesreporting these targets (14) in Figure3 exceeds the number of companiesreporting any target (12) in Figure 2.

In 2009, GEs water use was 10.7 billion gallons, a 30% reductionfrom 2006.General Electric

Our goal is to reduce ourGroup freshwater use pertonne of product by sixper cent by 2013 froma 2008 baseline.

Rio Tinto

Fig. 2: Number of companies settingany water-related target

Fig. 3: Number of companies setting absolute reductionand efficiency targets

11 (79%) 3 (21%)

4 (50%) 4 (50%)

Chemicals

12 (100%)



11 (79%) 3 (21%)


1 (8%) 11 (92%)

Oil & Gas


9 (56%) 7 (46%)


6 (43%) 8 (57%)

Metals & Mining

3 (50%) 3 (50%)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

11 (85%) 2 (15%)


5 (38%) 8 (62%)

Utilities


I Specific target reported (73)I No specific target reorted (49)

4 3

2 1

2 1

Chemicals

5 9



46


1

Oil & Gas


5 5


61

Metals & Mining

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

6 3


4 1

Utilities

Total

I Absolute target (36)I Efficiency target (33)


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Exposure of companies ownoperations to water stress

Overall, an impressive 88% of companies are able to identify whichof their operations are located in water-stressed areas, signaling a high degreeof awareness of the signi cance of water to continuing operations. Retail,Consumer Discretionary & ConsumerStaples (63%) scored notably less thanaverage and would be advised tomap the exposure of their sites towater stress.

Identi cation of risks in ownoperations and supply chains

Companies face numerous water-related risks and for the purposesof the questionnaire they are brokendown into three categories:

physical risks includingexposure to water stress, oodingand pollution;

regulatory risks includinghigher tariffs, the redistribution of water rights and more stringentregulations governing water quality;and

other risks including reputationalrisk (harming the corporate brand),infrastructure risk (disruptingoperations), and product risk (feltthrough decreased demand forwater-intensive products).

14 (100%)

Fig. 4: Companies able to identify whether their own operationsare located in water-stressed regions

7 (88%) 1 (12%)

Chemicals

12 (100%)



13 (93%) 1 (7%)


10 (83%) 2 (17%)

Oil & Gas


10 (63.5%) 6 (37.5%)


13 (93%) 1 (7%)

Metals & Mining

5 (83%) 1 (17%)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

11 (85%) 2 (15%)


12 (92%) 1 (8%)

Utilities

Percentage response ratesI Yes I No

Recent investmentshave had to be made toimprove water securityfollowing a water supplyshortfall identi ed in 2004for the Sasol SecundaOperations in South

Africa. A R2.7billion Vaal River Eastern Sub-system (VRESAP) pipelineproject, in which Sasolhas a 40% share, hasbeen commissioned andwill provide an additionalreliable supply of waterfrom the Vaal Dam toboth the Sasol Secundaoperations and for

use by the electricityutility Eskom.

Sasol

Motorola conducts routinerisk assessments toidentify high-risk situations

that could adversely affectour operations. Our crisisteams have developedpreparedness plans toensure that our responsewill be effective and ourrecovery swift.

Motorola


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In general, respondents reported agood awareness of the water-relatedrisks to their own operations, with

just 4% unable to identify whetherthey are or are not subject to suchrisk. Companies in Food, Beverage &

Tobacco (81%) and Metals & Mining(81%) were most likely to reportexposure to physical risks, while thosein Chemicals (20%) and Technology& Communications (31%) were leastlikely to. Similar patterns were alsoexhibited for regulatory and other risks.

Perhaps unsurprisingly given itsnewness as an area of managementfocus, 47% of respondents wereunable to identify whether their supplychains are subject to water-related risk.For many sectors, including all thoseconnected with agriculture, supplychains are central to understandingand managing water risk. Such riskcan be mitigated through risk mappingand assisting and encouragingsuppliers to reduce their ownwater footprints, but according to

disclosures, such practice is not yetcommonplace. Companies would bewell advised to remedy this.

To grow our business sustainably we need to reduce the total amountof water used across our value chain,especially in regions where water

availability is already under pressurefrom climate change.Unilever

Fig. 5: Risks reported for own operations and supply chains

Own Operations Supply Chain

Yes No Dont know A: Physical B: Regulatory C: Other16 12 8 4 4 8 12 16

16 12 8 4 4 8 12 16

0

0

Chemicals24

4

2

2 2

42 2

3 A

3 B

3

5

5

5 C

A

B

C

33

33

4 2

3 2 1

3 2 1

12 3

102

75

75

10 2

7 27 3

55 2

86

68

410

6 4 4

5 5 4

53 6

122

104

59

7 2 5

5 9

92 3

48

57

66

2 5 5

2 4 6

2 5 5

59

68

77

6 5 3

5 5 4

5 4 5

583

2 410

4 111

6 1 9

3 4 9

3 2 11

49

211

310

2 4 7

2 4 7

1 4 8

67

67

49

1 4 8

1 3 9

1 3 9

Utilities




Oil & Gas

Metals & Mining



Construction Infrastructure & real Estate

Sector overview


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Water withdrawals,reuse and recycling

While 86% of respondents disclosedthe total volume of water that theywithdraw, only 64% provided abreakdown of this gure (giving it eithergeographical or organizational context),and only 42% provided a gure forrecycling and reuse. Overall, Metals& Mining had the highest reportingrate and Utilities and Oil & Gas thelowest. Clearly, there is still work todo in terms of reporting basic watermetrics, though part of the problemunquestionably lies with the lackof a standard measuring andreporting methodology.

While one respondent repudiatedthe mantra you cant managewhat you dont measure, accuratemeasurement allows the methodicalidenti cation and implementationof water-saving methods, as well asthe accurate tracking and reportingof progress, and should sensiblyform an integral part of all watermanagement programs.

Fig. 6: Proportion of companies reporting figures for withdrawals and reuse / recycling

Provided gure for totalwithdrawal

Withdrawal gure brokendown by geography etc.

Provided gure forrecycling/reuse

Chemicals 88% 88% 38%

Construction,Infrastructure &Real Estate

100% 100% 33%

Food, Beverage & Tobacco 92% 58% 33%

Industrial & Manufacturing 93% 64% 36%

Metals & Mining 100% 86% 79%

Oil & Gas 50% 42% 33%

Pharmaceuticals &Biotechnology 100% 71% 50%

Retail, ConsumerDiscretionary & ConsumerStaples

81% 63% 25%

Technology &Communications 100% 69% 58%

Utilities 62% 23% 23%

Totals 86% 64% 42%

We promote waterconservation with oursuppliers. We routinelyask suppliers about theirconservation programmeswhen we issue requests forproposal, as well as theiroverall environmental, safetyand health performance.

AEP


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15

Sector overview

Detrimental impacts fromwater already suffered

Water is not just a concern for thefuture but is quite clearly a currentissue which is biting companiesalready. A highly signi cant proportionof respondents (39%) report that theyhave suffered detrimental impacts fromwater in the past ve years, with Metals& Mining (64%), Utilities (62%) andChemicals (50%) worst affected.

These detrimental impacts fall intothe broad categories of disruption tooperations from drought or ooding(in one case resulting in $100 millionin remediation costs), declining waterquality necessitating costly on-site pre-

treatment, increases in water prices,and nes and litigation relating topollution incidents.

The immediacy of water as a corporateissue was further highlighted by thetimescales associated with water-related risks, with more than half of therisks identi ed across all categories(physical, regulatory and other) beingclassi ed as either current or near-term(1-5 years).

6 (43%) 8 (57%)

Fig. 7: Companies reporting having suffered detrimental impacts from water

4 (50%) 4 (50%)

Chemicals

5 (42%) 7 (58%)



6 (43%) 8 (57%)


5 (42%) 7 (58%)

Oil & Gas


6 (40%) 9 (60%)


9 (64%) 5 (36%)

Metals & Mining

6 (100%)

3 (23%) 10 (77%)


8 (62%) 5 (38%)

Utilities

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Total


47 (39%) 75 (61%)

I Yes I No

Extreme weather eventssuch as hurricanes or

ooding can require ashut-down of our plants orhamper normal operations.

This is associated withproduction losses, notonly in terms of productionbeing temporarily stopped,but also in terms of thetransport of raw materialsand products by ship.

BASF


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16

Water as an opportunity

Perhaps the most encouraging themearising from the disclosures is that62% of respondents already recognizethe opportunities that water presents.Sectors reporting the greatestopportunities are Metals & Mining(93%), Chemicals (88%), and Industrial& Manufacturing (86%). Examplesinclude improved water managementpractices leading to reduced operatingcosts (e.g. for mines and industrial and

manufacturing processes), increasingurbanization and population growthexpanding the market for watertreatment chemicals (particularly in

Asia), and a growing demand for

water infrastructure to support growingpopulations and to adapt to climatechange (e.g. ood defense andstormwater systems).

While the nancial savings from betterwater management may be dwarfedby revenues, they impact directly ona companys bottom line and canthus be a powerful lever for improvingpro tability. Companies appreciationof this may have arisen from theirexperience with carbon management

or from a more general appreciationof the business case for sustainability.Companies are already seeing arange of bene ts from strongerbalance sheets to the ability to attract

and retain top talent as a result of reputational strength, and these arelikely to become more pronounced aswater challenges intensify.

Recognition of theenergy-water nexus

It is also encouraging that 72% of respondents, including at least 50%respondents from each sector, haveidenti ed linkages and tradeoffsin their management of water andenergy. Reductions in the use of water often but not always resultin reductions in the use of energy.

The widespread recognition of this

5 (36%) 9 (64%)

Fig. 8: Companies identifying water as an opportunity

7 (88%) 1 (12%)

Chemicals

8 (67%) 1 (8%) 3 (25%)



12 (86%) 2 (14%)


Oil & Gas


8 (50%) 6 (38%) 2 (13%)


13 (93%) 1 (7%)

Metals & Mining


Utilities


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

6 (46%) 7 (54%)

Total


5 (83%) 1 (17%)

5 (42%) 5 (42%) 2 (16%)

7 (54%) 5 (38%) 1 (8%)

76 (62%) 37 (30%) 9 (7%)

I Yes I No I Dont know

Air Liquide has developedseveral solutions forwater treatment in the

elds such as gas to liquidtransfer, activated sludgeoxygenation of oxidationprocesses. Watertreatment is getting moreand more important.

Air Liquide


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17

Sector overview

fact stands companies in good steadas they construct resource ef ciencymanagement plans that re ect theinterdependence of various inputs,and the opportunities for savings inmultiple areas through single projects.

Climate change and energy are inextricably linked. Water issues must be framed in the wider context, including issues of material ef ciency; availability of safe, clean water and sanitation; reducing travel and transport; supply chain accountability;

healthcare innovation; and

infrastructure improvement. Astra Zeneca

We fully understand the linkage between water and energy. As a power generator, AEP uses large quantitiesof water to produce electricity. Newtechnologies being developed, such ascarbon capture and storage, will also

require large amounts of water. These are issues we will have to address. American Electric Power Company

12 (86%) 2 (14%)

Fig. 9: Companies identifying linkages between the managementof water and energy

1 (12.5%)1 (12.5%)

Chemicals

9 (75%) 3 (25%)



11 (79%) 3 (21%)


Oil & Gas


9 (56%) 5 (31%) 2 (13%)


10 (71%) 4 (29%)

Metals & Mining


Utilities


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

9 (69%) 4 (31%)

Total


3 (50%) 3 (50%)

8 (67%) 4 (33%)

11 (85%) 2 (15%)

88 (72%) 31 (26%) 3

6 (75%)


Devon is constantlyreminded and aware of thefact that there is a closelinkage between energyproduction and water.Our business economicsand production potentialare often interrelated tothe volume of produced

uids that ultimately mustbe disposed of. If ourratio of produced water toenergy yielded begins toincrease, operating costsmay increase to a point inwhich a well may becomeuneconomic to produce.

Devon EnergyCorporation


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18

Geographical overview

The target sample comprises 302companies from a total of 34 countrieswith responses received from 25 of these. There is a heavy weightingtowards the US which accounts for35% of the total sample and 39% of the responses received, with 59responses and a 57% response rate.

The next best represented countriesare the UK with 14 responses (a 64%response rate), Japan with 13 (a 45%response rate) and Germany with 10(an 83% response rate). All South

African companies in the target sampleresponded, with Germany (83%) andSwitzerland (71%) also achievingparticularly strong response rates.

The nine countries with companiesincluded in the target sample from

which there were no responders areChile, Czech Republic, Malaysia,Mexico, Norway, Poland, Russia,Singapore and Thailand.

Fig. 10: Number of responding companies and response rates by country

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

UK

14 (64%)Japan

13 (45%)

Germany10 (83%)

Canada

8 (62%)France

7 (37%)Switzerland

5 (71%) Australia

4 (66%)

Netherlands

2 (40%)Belgium

1 (100%)Bermuda

1 (100%)

South Africa

3 (100%)Spain

3 (38%)

Brazil

3 (50%)

India

3 (38%)Italy

3 (60%)

China

3 (16%)

Colombia

1 (100%)Denmark

1 (100%)Finland

1 (50%)Ireland

1 (100%)Israel

1 (50%)Portugal

1 (50%)South Korea

1 (25%)Sweden

1 (50%)

US

59 (57%)



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19

Geographical overview

Germany7 57% 100% 43%

JapanFrance

United Kingdom

USA

Canada

Spain

Switzerland

Italy

India

Brazil

South Africa Australia

50 60 % 80% 35%

13 85% 100% 64%

7 57% 100% 52%

China2 50% 100% 67%

3 67% 67% 67%

4 50% 100% 50%

3 100% 100% 78%

3 50% 100% 50%

2 0% 50% 17%

5 40% 100% 33%

3 66% 100% 56%

5 80% 80% 7%

7 0% 100% 48%

Key

A Number of public respondents

B Percentage setting ef ciency orquality targets

C Percentage able to identify whethertheir own operations are located in

water stressed areas

D Percentage identifying risks to theirown operations (average of physical,regulatory and other risks)

A B C D

Fig. 11: Key facts by geography

Figure 11 highlights key statistics on themanagement of water and exposureto risk for each country represented bymore than one public respondent. Itfocuses on the number of respondents,the proportion that has set targets, theproportion able to identify whether theiroperations are located in water scarceregions, and the proportion reporting

that their own operations are exposedto water risk. South African and UKcompanies lead in setting performancetargets and in their ability to identifywhether their operations are located inwater stressed regions. Interestingly,companies from these two countries andIndia were most likely to report water-related risks to their operations.


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20

South Africa focus

South Africas available freshwaterresources are already almost fully-utilized and under stress. At currentprojected population growth andeconomic development rates, it isunlikely that the growth in demand forwater resources in South Africa cancontinue to be met. Water thus hasthe potential to become the limitingresource to the countrys economicdevelopment. This section examinesSouth Africas water resources, howthey might be affected by climatechange, the legislative context, andhow business in South Africa isbeginning to respond to the challenge.

Water in context how doesSouth Africa t into the globalwater picture?

South Africa is an arid country withonly 8.6% of annual rainfall becomingavailable as surface water, one of thelowest conversion ratios in the world.

This runoff is unevenly distributedboth geographically and over time,with great annual variability in rainfall.South Africas groundwater resourcesare also relatively limited compared toglobal averages.

This water scarcity and unpredictabilityis compounded by the pollution of surface- and ground-water resourcesby industrial ef uents, domesticand commercial sewage, acid minedrainage, agricultural runoff, and litter.

The countrys total renewable waterresource is 1,048 m3 per person orabout 13% of the global average of 8,210 m3 per person. A country issaid to experience water stress whenannual water supplies drop below1,700 m3 per person. When this levelfalls to between 1,700 and 1,000 m3per person, periodic or limited watershortages can be expected. Whenannual water supplies drop below1,000 m3 per person, the countryfaces water scarcity. Coupled withthis, South Africa uses about 25% of its renewable freshwater resourcesper annum, with use in excess of 10%typically seen as a cause of waterstress in a given locality.

Water resources are amalgamated into

19 Water Management Areas (WMAs)across the country. A signi cantamount of water is transferred betweenthese WMAs and also from South

Africas neighbors. Inter-Basin Transfer(IBT) of water has long been seen asthe solution to water scarcity in South

Africa, and of the nine provinceswhose water supplies are bolstered bytransfers, eight are reliant on IBT formore than 50% of their annual supply.It has been reported that GautengProvince, which supports around25% of South Africas populationand generates around 10% of theeconomic output of the entire Africancontinent, is 100% reliant on IBT for itswater supply.

South Africa is looking to othercountries such as Lesotho to helpmeet its projected demand forwater, though there are clearly risksassociated with dependence on extra-territorial supply of arguably the key

national resource.

How exposed is South Africa toclimate change?

Although the overall impact of climatechange on water resources is uncertainand will vary signi cantly from region toregion, evidence suggests that averagetemperatures in South Africa will riseand rainfall patterns will change.

These changes are likely to resultin greater evaporative losses fromdams and soils, and a greater risk of algal blooms. Reduced freshwater

ow in rivers will also reduce thesize of estuaries and be harmful totheir ecosystems (and therefore thepopulations that rely on them), andwill reduce the dilution of wastewaterdischarged into rivers. This, in turn, willincrease the already intense pollution in

the coastal zone.Recent studies have shown that South

Africa could face a water supply gapof between 17% and 25% by 2030assuming that water withdrawal forirrigation does not increase. South

African agriculture and municipalwater supplies are highly dependenton rainfall, but current models indicatethat climate change will lead to loweraverage rainfall and a reduction inwater availability of approximately 10%.Given the importance of South Africasagricultural sector to food securityin Southern Africa, any reduction inrainfall could have serious implicationsfor the region. South Africa is clearlyhighly sensitive to climate changeimpacts, and management of theexisting supply will be key to mitigatingthe impacts of rising temperatures.

1. The Market as a Driver or Constraint in the Move TowardsRenewable Energy in Southern A rica, TouchstoneResources, July 2009.

2. Inland Water: Background Research Paper produced orthe South A rica Environment Outlook report on behal o

the Department o3. Environmental A airs and Tourism, SRK Consulting,October 2005.

4. Nedbank Sustainability Outlook, Edition 1, Nedbank, August/September 2010.

5. The Market as a Driver or Constraint in the Move TowardsRenewable Energy in Southern A rica, TouchstoneResources, July 2009.


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21

What is the legislative frameworkaround water in South Africa?

Since 1994, there has been signi cantprogress in the development of South

African policy and legal frameworksregarding water resources. TheNational Water Act stipulates thatthe government is the trustee of thenations water resources and thatit must act in the public interest toensure that water is protected,used, developed, conserved,managed and controlled in asustainable and equitable mannerfor the bene t of all persons. It alsorecognizes the limits to the proposedsolutions of constructing new damsand increasing water transfer,and strongly advocates demandmanagement approaches. Finally, theact makes a provision for a reserveof water to protect the ecologicalfunctioning of aquatic ecosystemsbefore water uses such as industryor agriculture can be authorized.

South Africas main approachto addressing water issues isone of integrated water resourcemanagement. A key principle of thisis the need to balance protectionof water resources with social andeconomic development, and the onlytwo guaranteed entitlements to waterare for the ecological reserve and tomeet basic human needs.

South African companiesresponses to CDP WaterDisclosure

The South African response to CDPWater Disclosure has been extremelypositive, with all six of the 302 targetcompanies listed on the JohannesburgStock Exchange submitting responses,and a further six South Africancompanies responding on a purelyvoluntary basis. The fact that almost aquarter of all voluntary submissionshave come from South Africa indicates

how seriously the issue is felt. Of these 12 companies, eight respondedpublicly and are included in thefollowing analysis.

Physical Risk (Own Operations)

Regulatory Risk (Own Operations)

Other Risk (Own Operations)


8

6

5

2

3

Physical Risk (Supply Chain)

Regulatory Risk (Supply Chain)

Other Risk (Supply Chain)

6 1 1

5 2

3 4

1

1

0% 50% 60% 70% 80% 90%10% 20% 30% 40% 100%

Risks Identified

Companies from target sample Volunteers

Anglo American Eskom Anglo Platinum Exxaro Resources

AngloGold Ashanti Impala PlatinumBritish American Tobacco Nedbank

SABMiller Northam PlatinumSasol Woolworths Holdings

The following companies either register themselves as South Africanin the response, or are listed on the Johannesburg Stock Exchange:

All eight publicly responding companies(shown in blue above) reported thattheir own operations are susceptibleto signi cant physical risks (comparedto 48% of global respondents). Six(75%) also reported signi cant physicalrisks to their supply chain (compared to35% of global respondents), illustratingthat the vulnerability is widespread andacknowledged by procuring companies.

This vulnerability is further re ected bythe fact that all but one company (88%)reported having suffered a detrimentalimpact from water in the last veyears (compared to 39% globally).

These impacts include ooding, watershortages leading to power cuts andinterruptions to supplies of key inputs.

South A rica ocus


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22

However, the challenging environmentfacing South African companies hasprompted a stronger response thanseen elsewhere. All of the respondentshave a water policy, strategy ormanagement plan which falls underthe direct oversight of the board ora subset thereof. Further, 88% of respondents have set a speci c watertarget (compared to 59% globally),although all but one of these targetsis ef ciency related and none seeksthe absolute reduction in water usethat will be vital to the successfulmanagement of the countrys waterresources. Nevertheless, the indicationis that South African companiesare alert to water challenges andare putting in place the necessarymanagement structures.

It is clear that South African companiesare evaluating water risks with an eyeto extracting the opportunity as 88%identify water-related opportunities(compared to 62% globally). In South

Africa, these opportunities range from

infrastructure improvement projects toincreased recycling and wastewaterreclamation in mining operations.

Our water strategy is based on the5Rs (pRotect, Reduce, Reuse, Recycle

and Redistribute), a comprehensive, risk-based approach to managingwater in our business and in thevalue chain. This model provides aconsistent approach, recognizingthe different local issues and circumstances faced by each of our businesses.SABMiller

Northam endeavors to run a zerodischarge operation and closely

monitors any potential impacts

of its operations on surface and groundwater sources.Northam Platinum

0% 50% 60% 70% 80% 90%10% 20% 30% 40% 100%

Board /Executive Body Oversight of Water Policies

Specific Water Target Set

I Yes I No

Water Policy, Strategy or Plan in Place

Response Summary

8

8

7 1

Provided a Figure for Total Water Withdrawal

Provided a Figure for Recycling /Reuse

Provided Details of Actions Undertaken in Own Operations and Beyond

8

4 4

8

In March 2009, welaunched The AngloEnvironment Way(AEW), which sets out aconsistent approach toresponsible environmentalmanagement, supportingour vision for minimizingharm to the environmentby designing, operatingand eventually closingall of our operationsin an environmentallyresponsible manner. The

Anglo Environmental Wayincludes 10 performancestandards, which applyto all managed activities

across the world. Oneof these is a WaterPerformance Standard.

Anglo American


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ERMs view on how South Africancompanies should be thinkingabout water management

The current and future challengesin South Africa with regard to waterare clear, and the earlier action istaken, the more positive an effect itwill have. Forward thinking companiesin South Africa should be consideringthe following with respect to watermanagement:

1. Developing an accurate waterconsumption baseline againstwhich future performance canbe measured

2. Mapping out risks andvulnerabilities with regards to watersupply and quality both at the sitelevel and in the supply chain

3. Instituting measures and incentivesto drive ef cient use of water notonly in own operations but in thecommunities where they operate

4. Pricing water effectively intocapital expenditure programs,

incorporating the current andfuture costs of withdrawal intoaccounting processes

5. Engaging with community andgovernmental stakeholders aroundwater management issues,identifying opportunities forknowledge transfer wherepossible/feasible

6. Building adaptive capacity withregard to the physical impacts of climate change, for example bybuilding aqueducts

7. Seeking opportunities towork collaboratively withother companies and throughpartnerships with otherstakeholders over watermanagement and R&D, in orderto help mitigate the impacts of water scarcity and strengthen thereputation of the company in ahighly scrutinised market.

The scale of the challenge is onlystarting to become clear, and asit does so the need for action willbecome more pressing. Companieswith operations in South Africa wouldbe well advised to begin work onadaptation and mitigation strategiesbefore negative business and socialimpacts begin to tell, not only tosafeguard business interests but alsothose of the South African people whoshare a highly stressed water supply.

Water stress in South Africa will notdisappear. There is no magic x. South

African companies can reduce theburden on the existing supplies bystarting to implement best practicemeasures in their business. Part of this is accurate and comprehensivereporting, not only to disclosewithdrawals and recycling rates, butalso to share good practice, enhancereputation, and signal to investors andother stakeholders that this vital issueis being well managed. We applaudthe respondents for pioneering this

initiative in South Africa and encouragemore extensive participation fromthe JSE 100 for whom water is amaterial issue.

We will continue to ensurethat our business andsupply chain activityconserves our preciouswater resources. This effortis an important part of ourcommitment to sustainablebusiness practices andforms part of our Goodbusiness journey ourlong term plan to helppeople and planet.

Woolworths Holdings

South A rica ocus


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Best practice

Responses to the questionnaire havehighlighted a variety of best practicesthat can be adopted across sectorsto assist companies in managingtheir water risks, as well as unlockingbusiness value through processimprovement and the developmentof market offerings. The responseshave been highly encouraging, andrespondents would be advised tocarry this momentum forward as thechallenge intensi es.

Governance and policy

Board or executive committeeresponsibility for water to re ectits strategic importance in water-intensive sectors.

Responsibility for site and

regional water use assigned, withresponsible person(s) required toidentify local risks, opportunities,and reduction opportunities in orderto ensure management systemsre ect the local water dynamics.

Speci c target setting in termsof absolute reductions at thecorporate level, but formulatedbased on reasonable andachievable local targets, as wellas existing resource ef ciency/ reduction programs.

Supply chain assessmentand awareness building

Completion of annual water-riskmapping of Tier 1 suppliers.

Ongoing direct engagement of procurement teams (or othercompany team) with Tier 1suppliers to assist them withwater management.

Active investigation ofand investment in newtechnologies and approaches

Implementation of site-leveldaily/weekly water meteringtechnologies.

Business-case assessment of lowwater-use technologies, wastewatertreatment and recycling methods aspart of a comprehensive resourceef ciency plan.

Required investment return ratesfor ef ciency projects to re ect all

nancial and non- nancial waterrisks and opportunities.

Stakeholder collaborationand communication

Proactive involvement in localand regional water issues at thecommunity, NGO and governmentlevels, including communicatingwater reduction practices to thelocal population.

Active participation in businessand investor groups and initiativesregarding water, such as the DowJones Sustainability Index, theGlobal Reporting Initiative, theUN CEO Water Mandate and theWBCSD Water Working Group.

Customers are increasinglyaware of environmentalissues and as a providerof leading information itis incumbent upon us

to show good practice. Although not a consumer-facing company, ourreputation is extremelyimportant if customersare to have faith in theinformation we provide.

Reed Elsevier


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25

In Indonesia, BayerCropSciences is workingwith farmers and localgovernment representativesto convert rice productionfrom transplanted todirect-seeded rice. Theresults are higher yields,better quality, and anexpected 30% reductionin water consumption andmethane emissions.

Bayer

PG&EPG&E water management is impressive across a variety o metrics, not leasttheir reduction o water in own operations by more than 5% since 2009,exceeding their own target, and with leading sites recording reductions o up to45%. The establishment o an Environmental Leadership Index (a remunerationdeterminant), a company-wide Entech Energy and Environmental ManagementSystem, as well as their pioneering Green Supply Chain mean that the companyis leading its competitors in water management across the board.

Colgate-Palmolive Having reduced absolute water use by 29.8% between 2002 and 2009, Colgate-Palmolive are seeing the bene ts o a comprehensive company-wide ocus on watermanagement. Through the implementation o reduction and e ciency opportunitiesat the site level, internal company expertise has expanded rapidly, with 82% ocompanies reporting the implementation o more than 150 measures to reducewater consumption. Demand management through site-level commitment to waterreductions has led to signi cant bene ts, and will continue to do so as Colgate-Palmolive work to meet their next absolute reduction target that will be set this year.

Ford MotorSince the launch o Fords Global Water Conservation Initiative in 2000, wateruse in the company has allen by 62.4%, and the companys data managementprocesses regarding water are sector-leading. Environmental management is akey per ormance indicator at each site, and all levels o management up to theGroup VP o Management and Labour A airs are assessed at the year end on theirprogress towards previously set targets regarding environmental per ormance.

General Electric With the installation o high-tech metering systems (GE Sensing Ultrasonic fowmeters) among other measures, GE has managed to identi y and implement watersavings that have reduced absolute consumption in the company by 30% since2006. Their implementation o the Kaizen improvement methodology in their siteport olio, as well as their recognition o the business bene ts o the water issuethrough the development o the GE Water Process & Technology business unit,shows high-level understanding o current water management issues.

Best practice

Anglo American In a highly water-dependent sector, Anglo American have implemented a range ooperational practices in the pursuit o their ambitious goal o zero potable use intheir process operations. The extraction and recycling o tailings water in South

America, the establishment o a central water reclamation plant that has removedsix mines rom drawing on existing water sources, and measures to minimiseevaporation and maximise recycling and reclamation during mining processesare all examples o global operational improvements in water management. Thecompany-wide reduction o 20.8 million m3 (11%) in potable water use in 2009illustrates the ongoing success o Anglo Americans business unit-centric approach.

Taiwan Semiconductor ManufacturingTSM have exhibited numerous examples o best practice management in copingwith the situation o their major operations in areas o water stress. Methods andtechniques or water-recycling, even in the provision o ultra-pure water to theirown operations, are wide-ranging and provide a large and growing proportion intheir own operations.


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26

Chemicals

Response Summary

Management and governance

Water policy, strategy or plan in place 88%

Board/executive body oversight of water policies 75%

Speci c water target set 50%

Communications

Veri ed more than 50% of data 50%

Provided an indicator of nancial intensity 75%

Provided an indicator of activity-related intensity 50%

Accounting

Provided a gure for total water withdrawal 88%

Provided a breakdown of withdrawals bygeography etc. 88%

Provided a gure for recycling/reuse 38%

Water and energy

Identi ed linkages between water and energy 75%

Opportunities Increasing urbanization and population growth (especially

in Asia) will lead to high growth potential for water andwastewater treatment chemicals globally.

Imposition of widespread irrigation limits in agriculture,especially in water stressed areas, will increase demand fordrought-tolerant crops and water ef cient fertilizers.

High growth potential for processes and products thatsupport more ef cient water use and water recycling, as wellas innovative water delivery solutions (e.g. desalination etc.).

Risks More stringent regulation of water withdrawals and discharge

quality and improved techniques for detecting contaminantswill increase treatment and management costs as well asdif culties in obtaining production licenses.

Falling water levels (both surface and groundwater) will limitthe operation and expansion of facilities that rely heavily onpotable water in their manufacturing process.

Con icts may arise with communities and other water usersin water stressed areas with signi cant and/or increasingpressures on fresh water supplies.

Response rate: 100% (10 of 10)Key industries within sector: Diversi ed chemicals (4);Fertilizer and Agricultural Chemicals (4)

Voluntary responses: EcoLab

0% 50% 60% 70% 80% 90%10% 20% 30% 40% 100%

Own operations located in water stressed regions

Water intensive inputs from water stressed regions

Planned/unplanned discharges

Able to identify : I Yes I No

Key management indicators

7

2

6

1

6

2

Akzo Nobel, BASF, Dow Chemical, Du Pont,Israel Chemicals, Linde, Monsanto,Mosaic Company, Shin-Etsu Chemical, Syngenta International

(Public responders; Non-public responders )

2

0%

50%

60%

70%

80%

90%

10%

20%

30%

40%

100%

Physical Regulatory

Risk to Own Operations

Other Physical Regu lato ry

Supply Chain Risk

Other


Risks Identified

4

2

2

4

2

2 5

4

2

3

5

3

5

3


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27

Detrimental Impacts 63% of respondents identi ed detrimental water-related

impacts in the past ve years. Flooding disrupted the operations of ve of these, for example

in Indonesia and the US. More stringent regulations (as well as regulatory uncertainty)

regarding water discharge and groundwater use haveincreased the operational costof water.

One respondent was forced to spend approximately $100mto handle and mitigate in ows of brine to the companysoperations in North America.

Case Study Akzo Nobel and Water Risk ManagementHaving initiated life cycle and eco-ef ciency analysesfor their products in 2009, Akzo Nobel has also carried

out water risk assessments at production sites pertainingto six areas: water sources, supply reliability, wastewaterdischarge, ef ciency, compliance and social competitivefactors. Action plans were developed based on theresults and the company has set a target to achieve100% sustainable fresh water management at productionsites by 2015 as well as achieving signi cant reductionsin discharge volume and improvements in dischargequality. In addition, Akzo Nobel undertakes on-siteassessments of supplier sustainability practices 200such visits were made globally in 2009. They also requirecritical suppliers to perform a self-assessment regarding

water risk, use, discharge, infrastructure, scarcityand sustainability.

Water limitations in key agricultural regions will continueto be exacerbatedmulti-faceted solutions to helpmitigate this complex problem will be required, andcreates a signi cant global opportunity to developproduct and trait-focused solutions.

E.I. du Pont de Nemours and Company

Monsanto believes water management is an importantstep toward sustainable agriculture and reducingagricultures impact on the environment.

Monsanto

Key Statistics The 100% response rate from target companies indicates

an excellent awareness of water-related issues andunderstanding of the importance of water disclosure.

Respondents do not appear to be operating in areas of signi cant water stress, with 86% companies having lessthan 30% of their operations in water-stressed regions.Furthermore, just 25% of companies reported facingsigni cant physical, regulatory, or other risks in their ownoperations, signi cantly lower than other sectors.

On the value side, 88% of respondents believe water-relatedissues present signi cant business opportunities. Theincreased salience of water issues globally clearly presentsmajor business opportunities for the majority of respondents.

There is a signi cant gap in awareness of supply chain risk,with 63% of respondents replying that they did not knowwhether their supply chain was exposed to signi cant risks,averaged across the responses to physical, regulatoryor other risk. This should be targeted as an area for

improvement in the coming year.

Best Practice Actions Taken Establishment of a board-level Sustainability

Leadership Council. Accurate measurement and tracking of water discharge

volumes and quality, with results veri ed and published inannual reporting.

Ambitious global water targets set on the basis of achievablelocal-level targets quanti ed through engagement with sitelevel managers.

Participation in projects and initiatives with communitygroups, NGOs and governments to promote waterawareness, conduct research projects and addresspublic concerns.

Sponsorship of water research initiatives and promotion of information-sharing through the establishment of a waterknowledge centre to build on company expertise.

Key Takeaways1. The chemical sector demonstrates a high degree of

awareness of water issues in their own operations, asre ected in the proportion of companies with water policies(88%) and those who are able to identify operations in water-stressed regions (88%).

2. The shortfall in knowledge around supply chain vulnerabilityto water risks can improve with effective risk mapping andengagement programs with at least Tier 1 suppliers.

3. The tightening of regulations around the world on wastewater

discharge quality presents a signi cant managementchallenge in the chemicals industry, where treatmenttechniques, management and investment must keep pacewith the increasing accuracy and ubiquity of contaminantdetection techniques. This will require signi cant investment invulnerable sites.

4. The sharing of experience and best-practice measures acrossbusiness units will be central to minimizing the detrimentalimpacts to operations outlined above. Companies must drawon existing expertise to inform their ongoing management of this critical issue.

5. Water-related issues present signi cant businessopportunities to the chemical sector as the demand for waterand wastewater treatment chemicals, water ef cient fertilizersand technologies increases.

Chemicals


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3

0%

50%

60%

70%

80%

90%

10%

20%

30%

40%

100%

Physical Regulatory


Other Physical Regul atory

Supply Chain Risk

Other


Risks Identified

3

3

3

4 1

2

1 1

3

2

3

2

2

3

28


Response Summary





Communications




Accounting




Water and energy

Identi ed linkages between water and energy 50%

Opportunities Increased revenues from climate change adaptation

infrastructure projects, such as ood defense and stormwatersystems, as well as large infrastructure re-building projectsfollowing extreme weather disasters.

Expanding opportunities will arise from infrastructureupgrades required to support expanding urban populations inboth the transmission and treatment subsectors.

Risks

Stricter regulation surrounding withdrawals and otherchanges to water allocation principles will increase costs and/ or limit the scope of operations, as well as adversely affectingexpansion plans in areas of water stress.

Declining water availability and quality in speci c locations willlead to higher water treatment costs, and to transportationcosts in cases where water needs to be brought on-site foroperations to continue.

Response rate: 29% (6 of 21)Key industries within sector: Manufacturing of Construction andMining Equipment (4); Construction and Infrastructure (2)

Voluntary responses: Owens Corning, Acciona

Abertis Infraestructuras, ACS Actividades de Contruccion y Servicios, Atlantia, Bouygues, Caterpillar , Cheung Kong,China Overseas Land & Investment, CRH, Deere,Hang Lung Properties, Henderson Land Development,Holcim, Komatsu, Lafarge, Larsen & Toubro, Mitsubishi Estate, Mitsui Fudosan, Saint-Gobain,Sun Hung Kai Properties, Vinci, Wharf Holdings

(Non-responders; Public responders )

0% 50% 60% 70% 80% 90%10% 20% 30% 40% 100%

Own operations located in water stressed regions

Water intensive inputs from water stressed regions

Planned/unplanned discharges

Able to identify : I Yes I No

Key management indicators

5

3

5

1

3

1


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Detrimental Impacts Most respondents have not reported any detrimental impacts

related to water, but the sector is not immune from water risk,highlighted by the example of Owens Corning which sufferedsubstantial cost from a ood at a site in India in 2005. Thecompany responded by establishing an emergency responseplan and altering the plants layout to minimise future risks.

Case StudyTechnological Improvements andOpportunity RealizationIt is evident that corporations in this sector haveconsidered what water means in a strategic sense andhow they can position service offerings and modify coststructures to capitalise on water opportunities. In termsof own-site operations, Larsen & Toubro has undertakenvarious initiatives to reduce its per capita water useacross its operations, equipping campuses with rainwaterharvesting systems, and using this water for air-conditioning applications and recharge of groundwater.CRH also use recycled rainwater in 71% of theiroperations, signi cantly reducing site water costs. Interms of offerings, Komatsu Limited has developed arange of water-related technologies, including pipe-layingtechnology that does not require the breaking of ground,minimizes disruption and reduces costs. Larsen &

Toubros Water Process Technology business unit isexpecting rapid revenue expansion stemming from theiroffering of advanced desalination, zero discharge andlower-cost ultra pure water technologies. While there area range of sector initiatives, the focus on realising valuewith respect to water within the sector is encouraging,and is something other sectors could learn from. Optimizing our use of energy and resources throughef ciency gains and recycling requires the minimization

of the use of natural resources including water. Recyclingwater is a priority. Water usage in 2009 would havebeen over 40% higher if recycling policies had not beenimplemented at Group locations.

CRH

Key Statistics At 29% the response rate was the joint lowest of all sectors,

perhaps because water is not perceived to be a key inputinto operations. However, 83% of respondents identi edwater-related opportunities, all of which have been linked to

nancial bene ts. Water measurement and monitoring is relatively widespread

and sophisticated in the sector, with 100% of respondentsproviding withdrawal data broken down into regions. It is theonly sector in which this is the case.

None of the companies require key suppliers to report ontheir water use, risks and management, but 66% report thatthey have started this process or will do so in the near future.

Best Practice Actions Taken Annual environmental review of all operations, including use of

publicly available tools to identify individual sites susceptibleto water risk and creation of whole-operation risk maps.

Development of sustainability guidelines to educate supplierson water issues.

Using business continuity plans to prepare for extendedservice outages caused by factors beyond the companyscontrol (e.g. natural disasters).

Identi cation of opportunities in water and wastewatertreatment involving desalination and water recycling.

Implementing rainwater harvesting systems at all sites toreduce dependence on municipal supplies.

Key Takeaways1. Water-related issues present signi cant opportunities to the

sector, and respondents are already working to convert theseinto cost savings and/or increased revenues. Opportunitiesrelated to water adaptation through infrastructureimprovements will be especially signi cant.

2. Principal concerns for the sector include the lack of certaintyaround future regulation, expected water price increases,changes to water allocation principles in operational areasand tighter regulation of discharges.

3. None of the respondents require suppliers to report wateruse, risk or management (the lowest of all the sectors).

4. With one exception, respondents have yet to experiencedetrimental impacts arising from water-related issues, but inorder to ensure this remains the case they should continueto develop water management plans to minimize risk to theiroperations and supply chain.

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Response Summary





Communications




Accounting




Water and energy

Identi ed linkages between water and energy: 75%

Opportunities Reduction in water consumption can give rise to signi cant

cost savings given the water intensive nature of the sector. Implementation and promotion of best practice measures

can enhance reputation and yield a competitive marketadvantage.

Changes in precipitation patterns may allow agriculturalexpansion in some areas.

Risks Water scarcity could signi cantly impact the sector as water

is a major ingredient in products and a key component of most production process.

Physical risks such as ooding threaten to disrupt operationsand could lead to site closures in extreme cases, given thatwater is a key input for many of the sector respondents.

Physical risk is also keenly felt in the supply chain, given thehigh degree of reliance on agriculture for sales or production.

Tightening regulation across site portfolios will lead toincreased operating costs and may inhibit growth.

Increasing consumer awareness of water issues puts the foodand beverage sectors at risk of reputational damage, which

could adversely affect market share and/orconsumer demand.

Response rate: 65% (15 of 23)Key industries within sector: Packaged Foods and Meats (5);Brewers (4); Tobacco (4); Soft Drinks (2)

Voluntary responses: ConAgra Foods, Danisco, McCormick &Company, Molson Coors Brewing Company, Pilgrims Pride

Altria Group, Ambev ON, Anheuser-Busch InBev , Archer Daniels Midland, British American Tobacco , Cadbury,Coca-Cola Company, Danone , Diageo, General Mills ,Heineken, Imperial Tobacco Group , Japan Tobacco,Kellogg Company, Kirin Holdings , Kraft Foods, Kroger,Nestle , PepsiCo , Pernod Ricard, Philip Morris International,SABMiller, Wilmar International

(Non-responders; Public responders ; Non-public responders )

2

0%

50%

60%

70%

80%

90%

10%

20%

30%

40%

100%

Physical Regulatory


Oth er Physical Reg ulat ory

Supply Chain Risk

Other


Risks

Documents

CDP 2010 Water Disclosure Global Report