Imagine a world where there is a global war fought over a natural resource that makes up, in some cases, 70% of our human bodies.  We have to melt snow for water supply, landscaping is illegal and our water consumption is controlled by the government.  This may sound extreme, but the global water crisis is gaining speed.

As drought conditions become more severe in Southwest Florida, the local government is stepping in to monitor residents’ water usage, particularly in landscaping.  Similar drought situations and the effects of global warming, according to experts, are contributing to the long-standing water shortage in Beijing, China and surrounding areas.  Although there was talk about alleviating China’s water shortage by extracting water from underground sources, experts argued that the process was too dangerous.  To add another layer of complexity, take into account the pressures surrounding Marcellus Shale drilling and its possible unintended consequences on aquifers.  On November 16, 2010, Pittsburgh, Pennsylvania became the first city to ban Marcellus Shale drilling within its city limits in order to protect its water supply.  “Demand for water is projected to outstrip supply by a staggering 40 percent by 2030, and an estimated half the world’s population are likely to live in areas of high water stress by the same year,” said Carbon Disclosure Project Executive Chairman, Paul Dickinson.

To date, a lot of environmental focus has been pinned on greenhouse gas (GHG) emissions and carbon-intensive initiatives.  Carbon footprinting, ozone-depleting substance control or emissions reductions, the Carbon Disclosure Project (CDP), energy consumption and targets for efficiency are a few examples that come to mind.  Overtime, however, the water crisis has been gaining credibility.  I say ‘credibility’ because we go about our day-to-day lives using and seeing water as an abundant resource.  Think about it: from the time you wake up until the time you go to bed, you consume water at every turn of your day – brushing your teeth, taking a shower, flushing the toilet, washing your hands, making coffee, washing dishes, doing a load of laundry, eating or cooking any plant or animal product that was grown using water, reaching for your pen (that happens to be made in and shipped from China), swimming a few laps at the gym pool, watering your garden, watching your children run through a sprinkler, filling a humidifier, supplying water to your boiler for heat, washing your car or even giving Fido a bath.  That’s a lot of activity involving water.  I forgot to mention another example – drinking a glass (or 8 ) of water.  Water, which makes up 70% of our bodies, is vital to our own physical survival, not to mention our day-to-day lives.  We rely on water.

So, what if we didn’t have water?  That is the question that is perplexing many – and some at the executive level.  We’ve seen movement from companies whose products use water in production, consumer use or are water-intensive products themselves.  While their reasons for controlling water vary, some examples include: Levi’s reducing water in its jean production; Gap employing clean water efforts to ensure proper treatment and disposal of waste water; Method, Unilever, P&G, Dial and others emphasizing concentrated laundry detergents to the mass markets, although concentrated laundry soaps have been around for years; Delta, Moen and others producing water efficient faucets; Bosch limiting water usage to an astonishing 1.56 gallons per cycle in its highly efficient dishwasher; and the list goes on and on.  According to a statement made by Caterpillar in the CDP’s Water Disclosure Global Report, “industries need clean, abundant, secure, and competitively priced sources of water and have a responsibility to the public debate on water policies that affect industries.”  Supply chains will undoubtedly be seeing increased pressures surrounding water use.

Less than one percent of all water on earth is drinkable and accessible (groundwater or surface water).  The rest of the earth’s water supply is salt water (97%) or frozen (just over 2%).  When looking at current reporting tools, it was found that water issues are not as prominent as some other environmental issues.  A glance at the Global Reporting Initiative (GRI) G3 Guidelines showed water concern in a few areas.  Core indicators, those indicators identified in the GRI Guidelines to be of interest to most stakeholders and assured to be material unless deemed otherwise on the basis of the GRI Reporting Principles, revealed the following Performance Indicators related to water: Water – EN8 “Total withdrawal by source” and Emissions, Effluents, and Waste – EN21 “Total water discharge by quality and destination.”  Additional indicators, those indicators identified in the GRI Guidelines that present emerging practice or address topics that may be material to some organizations but not generally for a majority, showed three Performance Indicators surrounding water, including: Water – EN9 “Water sources significantly affected by withdrawal of water” and EN10 “Percentage and total volume of water recycled and reused” and Emissions, Effluents, and Waste – EN25 “Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization’s discharges of water and runoff.”

The Dow Jones Sustainability Index (DJSI) questionnaire touched upon common environmental management system (EMS) practices, corporate policy and other environmental goals, but did not place a huge emphasis on water practices.  One area of the questionnaire asks for total use/emission of waste, energy, GHG and water, as well as the trend against the targets.  New this year, the DJSI questionnaire recognizes the importance of water, stating, “new criteria has been introduced for the first time in the 2010 assessment. Based on our analysis of water consumption, 13 sectors have been identified as potentially exposed to water-related risks. The questions introduced in these 13 sectors focus on water availability and quality as a new source of risks for companies. They seek to assess whether companies are able to measure their exposure to water-related risks and whether they have appropriate risk management systems in place to mitigate risks around quantity/quality of water, regulatory changes or stakeholder conflicts.”

The Carbon Disclosure Project (CDP), an independent not-for-profit organization holding the largest database of primary corporate climate change information in the world, just published its first-ever CDP Water Disclosure Global Report.  The Report notes that “sectors reporting the greatest exposure to water risks are Food, Beverage & Tobacco and Metals & Mining, while Chemicals and Technology & Communications report the least.”  There were 302 companies targeted by the CDP’s Water questionnaire and 150 companies responded. An additional 25 companies also responded to the questionnaire on a purely voluntary basis (and are not included in the Report’s statistical data). Out of the 150 companies that responded, 67% report that responsibility for water-related issues lies at the Board or Executive Committee level.  Sixty percent of respondents have set waterrelated performance targets and an astounding 89% of respondents have developed specific water policies, strategies, and plans.

The CDP Water Disclosure Global Report has received a high response rate and acknowledgement in its first year.  As Molson Coors Brewing Company’s CEO, Peter Swinburn, puts it, “this is an indication of the growing importance that companies and their investors are placing on water issues. As we enter a new era of increased expectations around water management and reporting, the growing interest that is building behind CDP’s efforts is a valuable signal that we are moving collectively in the right direction.”

For more information, or to view the CDP Water Disclosure Global Report, please click here.

— Katherine Kaminski