Water

Keeping Our Economy Flowing

Record droughts in China and the southwestern United States. Unprecedented floods in Thailand and Australia.

These pressures, combined with growing water contamination from industry and agriculture, and inefficient management systems are creating major new challenges for generating power, producing food and supplying clean drinking water to growing populations. Ample fresh water is essential for a stable and prosperous global economy. Companies and investors have a direct interest in preventing water pollution, reducing unsustainable water use, increasing efficiency and improving infrastructure to ensure sufficient water for developed and developing economies alike.

Companies and their supply chains have major impacts on water resources. Food and fiber production represents at least three-quarters of global water use. In the United States, the electric power sector alone accounts for 41 percent of freshwater withdrawals. Businesses need to understand the impacts their operations and supply chains have on water supplies and put management systems in place to reduce pollution and improve water efficiency.

Increasingly, investors are boosting scrutiny of water risks in their portfolios and calling for better transparency and stronger action from companies to mitigate these risks.

Learn more about water conservation and efficiency measures in Texas from a recent CleanTX Forum, moderated by Ceres' own Sharlene Leurig (video below)

CleanTX April 2012 Motivating Water Conservation, Efficiency and Reuse in Texas (360p) from CleanTX Foundation on Vimeo.

Water Initiatives

Ceres is working with companies, investors, policymakers, environmental organizations and other stakeholders to improve water management and increase reporting on water issues that pose risks to businesses, communities and the environment. An integral part of our work is improving how capital market players – including investors, companies, utilities, credit rating agencies and regulators such as the SEC – are factoring these risks into their own governance systems and strategies.

Advancing Corporate Water Stewardship

Ceres, in consultation with a range of investor, corporate and NGO stakeholders, has developed a first-of-its-kind tool – the Ceres Aqua Gauge TM – to support corporate action on water stewardship and enhance investor analysis of corporate water risk. The tool, which is backed by investors managing over $2 trillion in assets, provides a benchmark for best practice and enables investors to assess, scorecard and compare companies on their management of water risk. The Aqua Gauge also provides companies with a clear roadmap for developing comprehensive, 21st century water stewardship strategies that integrate consideration of water issues from the boardroom all the way down to the supplier factory or farm field.

Learn more and download Ceres Aqua Gauge.

Clearing the Waters – Improving Corporate Disclosure on Water Risk

The 2010 Ceres report, Murky Waters? Corporate Reporting on Water Risk provides the first comprehensive ranking of water disclosure practices of 100 publicly-traded companies across eight sectors. The report highlights key water risks facing these industries, documents gaps as well as best practices in water risk reporting, and lays out a set of recommendations for companies and investors.

Financing Sustainable Water Infrastructure

In January 2012, Ceres, in collaboration with the Johnson Foundation and American Rivers issued Charting New Waters: Financing Sustainable Water Infrastructure, a study that highlights how innovative financing and pricing flexibility are key to preparing the nation’s aging freshwater systems to handle growing demand and environmental challenges. In order to achieve more sustainable, resilient and cost-effective freshwater systems, the report recommends bold new approaches for financing and operating public water systems, including green infrastructure, closed-loop systems and water recycling; flexible water pricing and revenue structures that distinguish between drinking water and various other types of water; and full-cost accounting of water services and financing mechanisms.

In October 2010, Ceres and Water Asset Management released The Ripple Effect: Water Risk in the Municipal Bond Market, which evaluates the risks posed by water scarcity threats in key U.S. cities on the value of bonds issued by municipal water and electric utilities. The study illustrates that weak conservation measures, under-pricing of water and power, and less than robust analysis by credit rating agencies can lead to hidden risks for bond investors.

Stakeholder Engagement

Ceres holds regular stakeholder engagements focused on water risk with companies such as PepsiCo, Suncor and Levi Strauss & Co. These meetings, facilitated by Ceres, bring together corporate executives, investors and public interest groups to increase corporate transparency and action on water risk – including performance goals for increasing water efficiencies across operations, product lines and supply chains.

Investor Action

Many of Ceres’ investor members are engaging companies, through dialogue and shareholder resolutions, to encourage stronger corporate action on water risks. Investors have focused particular attention on the oil & gas, electric power, and food and beverage sectors and are asking companies for more disclosure on water risk exposure, water management practices and performance.

Policy and Regulatory Action

Ceres is challenging rating agencies and public utilities to more accurately assess and address water risk based on more realistic models of future water availability. By asking new questions and raising new concerns about future water availability, Ceres is encouraging stronger conservation measures, new technologies and infrastructure solutions, and better reuse and recycling systems to reduce water use and increase efficiencies of water systems.

Learn More

Read articles, download reports and listen to podcasts about water risk listed on the right-hand side of this page.

For more information

To learn more about water scarcity and other water risks, or to get involved in Ceres' work, contact Brooke Barton, senior manager of Ceres' Corporate Program.