Water Disclosure

Photo by Davidpd. Some rights reserved.

Jenner & Block’s Corporate Environmental Lawyer Blog yesterday posted a bit about the results of the recently released 2011 Water Disclosure Report by the not-for-profit Carbon Disclosure Project (CDP), which holds “the largest database of primary corporate climate change information in the world”. The blog post highlighted the following “key findings” from the process and the report:

  1. 190 companies or 60% of identified companies responded to the questionnaire – a 10% increase over last year.
  2. Over half (59%) of companies responding reported exposure to water-related risks such as flooding, scarcity and reputational damage.
  3. One third (38%) of companies already have experienced water-related business impacts, such as disruption to operations from severe weather events or water shortages.
  4. 63% of companies believe that water presents commercial opportunities and commonly identified opportunities relate to increased water efficiency, among others.
  5. 72% of companies understood the linkages or tradeoffs between water and carbon emissions.
  6. 41% of companies confirm that the biggest water risk facing their businesses is water stress or scarcity.

The findings were based on a questionnaire sent to 315 companies on the Global 500 Index identified as operating in the most water-stressed locations or industry sectors.

The report itself has a great breakdown of trends across the sectors, but if you are interested in seeing some real life examples of water-related risk disclosure from public companies, check out knowledgemosaic’s risk factor search page, which extracts risk-related disclosure from SEC filings.

In the past year alone, there have been more than 800 risk factors mentioning floods or flooding. For instance, NewLink Genetics reports:

“Our facilities are located in areas where floods and tornados are known to occur, and the occurrence of a flood, tornado or other catastrophic disaster could damage our facilities and equipment, which could cause us to curtail or cease operations.”

(click here to see an excel report of all flood-related risk factor search results)

Interestingly enough, in the same time period, there have been only 17 mentions of water stress, shortage or scarcity in the risk factors. One such risk factor – from Anheuser-Busch InBev S.A. – reads:

“We also face water scarcity risks. The availability of clean water is a limited resource in many parts of the world, facing unprecedented challenges from climate change and the resulting change in precipitation patterns and frequency of extreme weather, overexploitation, increasing pollution, and poor water management. As demand for water continues to increase around the world, and as water becomes scarcer and the quality of available water deteriorates, we may be affected by increasing production costs or capacity constraints, which could adversely affect our business and results of operations.”

(click here to see an excel report of risk factor search results mentioning water stress, shortage or scarcity)

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