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In October, a retaining wall of the tailings pond dam at the Ajka alumina plant burst releasing an estimated 700,000 m3 of liquid waste. The disaster affected 15 square miles, killed 10 people, and injured 150. All life in local reaches of the Marcal River was extinguished and the Hungarian government has since spent US$166 million on cleanup and reconstruction. The Marcal’s link to the Danube river system meant that six other countries had to develop emergency response plans. In September 2011, the company was fined more than US$636 million.
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Ceres Aqua Gauge
The Ceres Aqua Gauge: A Framework for 21st Century Water Risk Management, introduces a first-of-its-kind tool – the Ceres Aqua Gauge – to enhance investor analysis of corporate water risk and to support corporate action on water stewardship. The tool was developed through a collaboration with the World Business Council for Sustainable Development, Irbaris, and IRRC Institute in consultation with representatives from over 50 financial institutions, companies, and NGOs.
The Ceres Aqua Gauge: A Framework for 21st Century Water Risk Management, introduces a first-of-its-kind tool – the Ceres Aqua GaugeTM – to enhance investor analysis of corporate water risk and to support corporate action on water stewardship. The tool was developed through a collaboration with the World Business Council for Sustainable Development, Irbaris, and IRRC Institute in consultation with representatives from over 50 financial institutions, companies, and NGOs.
Backed by investors managing over $2 trillion in assets, the Aqua Gauge provides a benchmark for best practice and enables investors to assess, scorecard and compare companies on their management of water risk. It 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. The Ceres Aqua GaugeTM builds on the Ceres Roadmap for Sustainability. Like the Roadmap, the Aqua Gauge focuses on governance and management, stakeholder engagement and disclosure.
A Resource for Investors and Companies
The Aqua Gauge is a flexible Excel-based tool that allows investors to scorecard a company's water management activities against detailed definitions of leading practice. The tool also benefits companies by giving them a resource to inform and strengthen their own water management strategies.
Designed to enable both rapid and more comprehensive analysis, the Aqua Gauge gives investors the option to assess the company against a short list – or “Quick Gauge” – of core management practices appropriate to the company’s risk profile as well as assessing a comprehensive set of corporate-level practices that provide a more detailed picture of the company’s water management approach.
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Who should use the Ceres Aqua Gauge?
The Ceres Aqua Gauge is designed to enable investors and companies to better understand water risks and the practices used to manage them. The Aqua Gauge can benefit a range of decision-makers across the investment value chain:
- Portfolio managers and analysts
- Governance specialists
- Financial and ESG data providers
Companies that seek to develop more robust water management strategies will also find value in the Ceres Aqua Gauge. Specifically, it can help with:
- Self-assessment and strategy development
- Investor communications and engagement
- Supplier and industry engagement
Next Steps
Because business responses to water issues are evolving rapidly, the leading practices reflected in the Aqua Gauge should not be seen as definitive or static. With this report, Ceres seeks to establish the Aqua Gauge as a framework and tool that will be updated on a regular basis and informed by ongoing stakeholder feedback to reflect advances in 21st century water management.
To further ground the tool in the realities of investor and corporate decision-making, Ceres is developing a program to road test the Aqua Gauge with a broad range of investors and companies.
To learn more, or to get involved, contact Brooke Barton at barton@ceres.org or Berkley Adrio at adrio@ceres.org.
Case Studies in Water Risk Management
Building on real world examples of what leading companies are doing today and aspiring to do tomorrow, the Aqua Gauge brings together a broad range of leading corporate practices for dealing with the complex water management challenges of the 21st century. Some of the leading practices are listed below. For more examples, download the report.
Nestlé: Assessing Facility Impacts and Risks
As the world’s largest food company, Nestlé has an extensive multinational manufacturing base that used 144 million m3 of water in 2010. To assess water risks across its 450 global facilities, the company relies on a set of analytical tools to help local managers understand both their own water use and how local demographic trends and physical conditions might affect the water resources it relies on to make its products.
Nike: Driving Down Supply Chain Impacts
In 2001, the Nike Water Program was created to evaluate and reduce the water quality impacts of roughly 50 of the dyeing and finishing facilities that supply Nike's contract factories. Full compliance requires participating supplier facilities with wastewater volume greater than 50 m3 per day to demonstrate wastewater quality that meets all local/national discharge standards or BSR Water Quality Guidelines, whichever are stricter.
PepsiCo: Positioning for a Water-Constrained Future
In 2009 PepsiCo, with the NGO Forum for the Future, undertook a scenario-planning exercise looking at potential environmental and social risks and opportunities facing the company out to 2030. With respect to water, the exercise brought to light potential constraints on future water availability in key countries and markets, with implications for PepsiCo’s food and beverage plants and its agricultural supply chain.
SABMiller: Collaborating to Address Water Risks in Agriculture
In 2009, the global brewing company SABMiller, in partnership with the World Wide Fund for Nature (WWF) and the German international development agency GIZ, calculated water footprints for the company’s operations and suppliers in Peru, Ukraine, Tanzania and South Africa. One of the goals of the effort was to determine which part of the beer value chain (agriculture, processing, brewing, bottling, or waste disposal) was most water-intensive. The assessment showed that in all four countries agriculture (primarily the cultivation of barley, corn and hops) accounted for over 90% of the water embedded in SABMiller’s products.
Suncor: Mitigating Water Impacts in Canada's Oil Sands
For Canadian oil sands producer Suncor, water management has long been an area of focus and concern. Through operational improvements and capital investments in water efficiency and reuse, the company decreased its water use intensity 40% between 2003 and 2010. Nevertheless, the majority of Suncor’s water use impacts and risks are related to the company’s storage of mining waste products, referred to as tailings, which traditionally have been disposed of in large ponds.
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