This document provides an overview of water scarcity issues and how businesses are addressing them. It discusses how water scarcity will impact nearly half of the world's population and many companies recognize it as a risk, though few are adequately prepared. It examines initiatives to increase corporate water stewardship and reviews 10 companies' approaches, finding that some are tackling water head-on while others are just getting started. Overall, it argues that while awareness is growing, many businesses still show complacency around this important issue.

1. DIRECTIONS
SUPPLEMENT
FEbRUaRy/
MaRCh 10
Water: the elephant
in the room
Why water is the big issue
getting ready to charge

2. Directions Supplement
February/March 10
Welcome to Directions
Sustainability team The Marsh Center for Risk Insights found that 40% of Fortune 1000
salterbaxter
companies recognised the potential impact of water shortages, yet
only 17% felt prepared for it. Water is clearly the elephant in the
room. We thought for the first edition of Directions in 2010 we’d pay
it some attention.
So we’ve invited Dave Tickner of WWF-UK, to give us an overview
of the challenge water scarcity presents. Marcus Norton, Head of
Water Disclosure at CDP, explains why business does not have the
luxury of time. And to provide an insight into who’s saying what,
salterbaxter provide a snapshot review of some notable water
babies, and some noticeable by their absence from the debate.
The Intergovernmental Panel on Climate Business forums like the CEO Water Mandate
Change has stated that a 2-3°C rise in global have helped to distil the debate further. But
temperatures could result in water scarcity is all this working to improve how businesses
for over 3 billion people – almost half of the approach the issue? With 40% of Fortune
world’s population. The ACCA identified water 1000 companies* agreeing that the impact
as the next big issue after climate change; of a water shortage on their business would
issues of supply and fair use are becoming be ‘severe’ or ‘catastrophic’, we would expect
an increasing challenge for business in many a large number to be prepared for the crisis.
parts of the world; and there is a compelling But only 17% said they actually were.
argument that the water challenge is
inextricably linked to climate change. Water The Polaris Institute, amongst others, have
plays an essential role for many industries voiced concerns over initiatives such as the
so surely it should be high on corporate CEO Water Mandate, stating they are more of
agendas, but is it? We’ve noted an air of a corporate PR effort to gain greater control
complacency amongst business – many are over water resources and services. We felt it
aware of the water issue but few are currently would be worth taking a look at a selection of
responding to it or indeed prepared to deal businesses to see who is talking about water,
with it head on. what they are saying and what is being done.
It’s fair to say that we are all increasingly *The Marsh Center for Risk Insights.
aware of the scale of the water issue.
Initiatives from institutes such as the World
Economic Forum (WEF) and the Pacific
Institute have increased awareness of the
water challenge and businesses’ recognition
of its importance.
Less than 1%: business’ contribution
to online dialogue on water
Salterbaxter has recently set up an online 07/01/10, almost a third of posts were
issues tracker, powered by FindAgent*. from bloggers and opinion formers (1,449).
It is a tool which enables you to chart online Another third were press or news sites,
conversations on any number of issues, and only 33 posts (which is under 1%)
providing insight into stakeholder debate were businesses. It looks like businesses
and opinion. We did a search for online are noticeably absent from the debate
debate and dialogue around water post and are not thinking about how to
COP15. Top line findings show that of the effectively engage with stakeholders
4,452 online postings from 19/12/09 to on this issue.
* Salterbaxter and FindAgent are working together on issues
tracking and analysis services for corporate responsibility.
If you would like more information please get in touch.

3. Tackling the elephant in the room
We’ve picked ten of the CEO Water Mandate H&M:
signatory companies and looked at their public H&M does not own any production facilities
disclosures. We found a range of approaches, so aim to find solutions for impacts within the
some detailed, some not and we’ve grouped supply chain – not only with its direct suppliers
them into those tackling the elephant in the but deeper in the supply chain with indirect
room, and those only just getting started. suppliers. H&M see’s this as essential to
3bn
establishing an accurate water footprint. The
Bayer: aim is to broaden initiatives on the issue to
Water is identified as one of the three key focus on water consumption in addition to
issues that Bayer face. Bayer communicate wastewater, particularly in fabric production
an understanding of the business benefits, and dyeing. H&M realises the influence it
have a vested interest in good water can have on suppliers to help resolve
management because it needs to cool indirect impacts and bring about positive
People who will suffer and operate production facilities, and use change, a good example of meeting the
water shortages as a technology to come up with solutions to the supply chain and collective action elements
result of a 2–3°C rise in issue. Bayer focus on innovative solutions to of the Water Mandate.
global temperatures. areas such as effective wastewater cleaning,
energy efficiency through nanotechnology Nestlé:
and solutions for agriculture. Nestlé is probably the most advanced of the
batch in terms of the time it has dedicated
Carlsberg: to the subject. Water is one of its three key
17%
Carlsberg uses 3.7 hectolitres of water to issues and being the world’s leading bottled
make 1 hectolitre of beer (2008) making it water company so it should be. In 2008 it
the most efficient global brewing company achieved its water targets and reduced
in terms of water use. And it plans to cut water withdrawal per tonne of production
use by a further 11% by 2012, taking water by 6%. Nestlé’s combined long-term and
use down to 3.3hl per hl of beer. It aims short-term approach has resulted in a total
to establish partnerships with local and reduction in water withdrawals per tonne
international organisations to further improve of products by a massive 58% since 1999.
Of Fortune 1000 companies* water efficiency. Carlsberg Poland’s Bosman
said they actually were prepared Brewery is operating one of Europe’s most Reed Elsevier:
for the crisis. compact and efficient waste water treatment Reed Elsevier’s strength lies in robust
plants – one of less than ten in the world at the measurement of progress against targets
moment. We look forward to reading more and clear presentation of data: “Absolute
about progress against promises soon. water usage decreased 9% from 485,951 m3
in 2007 to 441,905 m3 in 2008, allowing us to
Coca-Cola: exceed our five year 10% reduction target. On
With 1.6 billion servings consumed each day, a normalised basis, we achieved an equivalent
Coca-Cola uses a lot of water to make it’s 24% reduction between 2007 and 2008 and
drinks. Globally it uses 2.43 litres of water for a 35% reduction between 2003 and 2008”.
each litre of drinks produced, in the UK Good performance on reducing water impacts
this drops to an impressive 1.5 litres. It is and communicating year-on-year data in a
targeting a 20% improvement in water comparable and transparent manner.
efficiency by 2012 based on 2004 figures.
Global action includes water-risk surveys
for each of their 79 production facilities
and Coca-Cola is looking to benefit from
collective action: “to magnify our efforts,
we work with peer industries, sharing best
practices and benchmarking our progress”.
A good example of a company tackling the
issue head on and in a collective way – but
it is one of it’s biggest issues.
40%
Of Fortune 1000 companies*
agree that the impact of a water
shortage on their business would
be ‘severe’ or ‘catastrophic’.

4. Directions Supplement
February/March 10
Just getting started…
Arup: Shell:
For Arup, leaders in building design and Royal Dutch Shell seems to understand the
construction, water should be a material scale of the water issue stating that by 2025
issue. The current efforts seem to fall short of two-thirds of the world’s population could be
the mark. Yes, it supports Water for the World living with water stress. This doesn’t translate
(WftW), an initiative to educate and engage 11 to its own operations however, as it goes on to
to 18-year-olds on water, but we were state that its industry is “not a big water user”.
disappointed not to find more. Due to This is followed by data showing Shell used
the nature of the business we’d expect approximately 224 million m3 of fresh water in
to see Arup promoting sustainable water 2008, significantly more than many of the
management and best practices through CEO Water Mandate peer companies covered
all aspects of its work. Perhaps this is here. Shell is a big organisation and given the
happening behind the scenes and is scale of this water use we feel it should be
simply not reported. In brief, Arup would doing more to address the issue or at least
58%
definitely benefit from more structured matching impacts more closely with the wider
communication on progress in tackling water issue.
sustainability issues.
Cadbury:
Cadbury is an innovative communicator
Reduction in Nestlé’s water on sustainability. For the layperson, video
224
withdrawals per tonne of snapshots introduce issues followed by links
products since 1999. to Cadbury’s targets and more detail in the
‘I know my stuff’ section. Unfortunately
the coverage on water doesn’t match the
communications approach. Unlike carbon
and packaging there is no reduction target
for water, only a goal to have water reduction
million m3
plans at all sites by 2010. And the more
detailed section doesn’t give much more.
Performance is good (a 10% reduction Of fresh water used by Shell in
between 2006 and 2007) but reported 2008.
confusingly: the text gives data in tonnes
and the chart shows cubic metres! By
Cadbury’s own admission “our water strategy
is in the early stage of development” and
we’d expect to see more coming soon.
GSK: So of the ten companies we’ve looked at, six
Unfortunately it is difficult to find anything are making headway and four need to be more
3.3
in GSK’s site on water as it’s hidden deep transparent in their approach and realise the
within a hierarchy of subjects. The approach impact water scarcity can have on them.
is mainly housekeeping – aiming to reduce Although many businesses are aware of the
water use, reuse it when feasible and treat elephant in the room, many don’t seem
wastewater to minimise adverse prepared for the challenge, don’t realise the
environmental impacts. Snore. It does set potential direct and indirect supply chain
a target to reduce water consumption by impacts and don’t have plans in place to deal
Carlsberg’s target amount of 2% per annum per unit of sales which with the growing issue. Overall we’d like to see
hectolitres of water used to make equates to an 8% saving by the end of 2010. more disclosure and engagement. There’s just
one hectolitre of beer (versus But without demonstrating a real knowledge not enough conversation and debate on this
current figure of 3.7). of where the impact of its water usage falls, issue from the corporate world. So going back
this doesn’t appear to be a strategic approach. to the original question, is there an air of
Rather surprising for a company that tackles complacency? Yes. Many businesses are not
sustainability issues so well in other areas. acknowledging the scale of the water issue.

5. A river should run through it
Dave Tickner Ensuring water security will be a defining challenge for the
Head of Freshwater
Programmes
21st Century. Whether your concern is food or energy security,
WWF-UK poverty reduction or business risk, climate change, conflict or
biodiversity, managing water sustainably is a critical foundation.
The litmus test of water security is the continued flow of the rivers,
lakes and aquifers from which we take our water.
“It’s not like the stuff falls from the sky”. It was
WWF’s Living Planet Report has concluded
1996, and I was chatting in the pub with Alison, that declines in freshwater biodiversity are
a drily humorous colleague of mine. She was probably sharper than those in the rainforests.
complaining about her rising water bill. Her But water scarcity affects people as much as
ironic observation has stayed with me. wildlife. Women and girls have to travel further
to get water for domestic use, preventing
Those of us living in the UK are accustomed them from working or attending school.
to water falling from the sky. But it’s different Farmers struggle to grow crops when
for Hammad, my counterpart in WWF Pakistan. irrigation is impossible. Hydropower dams
His is a country with a largely agricultural can’t generate electricity (a recent problem
economy and low rainfall. Without the glacier- across Latin America). Reports of deadly
fed flow of the Indus River, which feeds one conflict between water users trickle in from
of the world’s largest irrigation systems, East Africa with depressing regularity.
Pakistan’s rapidly growing population would Uncertainty over rainfall and river flows can
be in trouble. Already demand for water and be harder to deal with than simple lack of
its inefficient use means that the Indus often water and will probably increase as climate
dries up before it reaches users downstream. change takes hold.
Water scarcity in far-flung nations can affect
It’s not like the stuff us here in the UK too. When drought reduces
farm output, as in Australia recently, world
falls from the sky grain prices are hiked which affects everyone
and in some areas so-called tortilla riots can
follow. WWF’s UK Water Footprint report
showed that the average citizen in this country
soaks up 4,645 litres of the world’s water
Compare world maps of population and every day. But only 150 litres flows through
hydrology and you’ll be alarmed at how our taps. The rest is “virtual water” used
many people live in places where water mostly during the cultivation and processing
resources are similarly stretched. Around of the food and fibres we use. Although the
two billion people live in water stressed size of these numbers is startling, the key is to
regions now and this is a number that’s actually understand and reduce our impacts
likely to grow in coming decades. on water-scarce regions, rather than obsessing
about the total size of our footprint. This is a
crucial difference between carbon and water.
But there’s good news. To quote the journalist
Fred Pearce, almost everywhere in the world
we manage water “spectacularly badly”.

6. Directions Supplement
February/March 10
You might ask why this is good news? Well it Encouragingly, new initiatives such as the
implies that in most places there is, in theory, UN Global Compact’s CEO Water Mandate
enough water. There’s no need yet to seek out are helping to stimulate this approach. WWF
new supplies on another planet. We just need has helped to establish the Alliance for Water
to manage the stuff more wisely. Stewardship and the Water Footprint Network
which are developing tools and standards to
There’s another reason to be cautiously guide private sector efforts; we have published
optimistic. The last decade has seen a wave Investigating Shared Risk in Water; and we
of progressive water legislation across the work in partnership with SABMiller, Marks &
world. Starting in South Africa and Mexico Spencer and others to address shared risks
and extending through the European Union, in key business locations.
Brazil and China, governments have passed
laws that prescribe integrated water But a few progressive companies and
management across entire catchments. The voluntary initiatives is only the tip of the
emphasis is on meeting people’s basic needs iceberg. Many more companies do not look
first and then allocating remaining water at water as a priority issue than do. Fewer
equitably. Importantly, these laws emphasise still look at water impacts beyond their
the importance of protecting sources of water factory gates, up and down the supply chain.
4,645
– our rivers, lakes and aquifers, not just being Somewhat overshadowed by the wildfire
fair with who uses the resources. debate on climate change of recent years,
water is certainly an elephant in many a
Implementing these laws is challenging. boardroom. But it is certain that growing
Capacity in water management institutions populations and increasing climate change
is limited, hydrological data is sparse and impacts will only serve to intensify the
awareness is low among politicians of the pressure on water resources around the world
WWF’s UK Water Footprint report return on investment from better water and make all water users begin to take notice.
showed that the average citizen in management or the risks of doing nothing.
this country soaks up 4,645 litres As I write winter snow is falling outside my
of the world’s water every day. This is where businesses, motivated by window and although we face challenges I am
enlightened self-interest, can contribute. optimistic. This is because sustainable water
Pioneering companies are realising that their management, including better use of the
supply chains and operations rely on water water we have, is increasingly regarded as
stewardship beyond the factory walls. Put a necessity by governments and businesses
simply, the business case goes something alike. Admittedly I am based in the UK and
like this: perhaps my outlook would be different if I
was, like my colleague Hammad in Pakistan,
My business uses water and so has an impact one of the 2 billion living at this moment in
on other water users and the environment. areas of water stress.
If I use too much water, other users complain
and I lose my social license to operate. If they
use too much water, my business suffers from
shortages. If we all use too much water, the
government imposes stricter regulation. If
the environment and local communities suffer
from our over-use of water, my business may
be blamed. So I should work with other users,
governments and NGOs to manage water
2bn
resources better to reduce our shared risk.
The amount of people currently
living in water-stressed regions.

7. Rising to the looming water challenge
Marcus Norton If climate change is the shark, water is The first step for business in tackling the
Head of CDP Water Disclosure its teeth – it is through water that climate rising challenge of water is to become aware
Carbon Disclosure Project change will bite. Changing patterns of of their water usage, risks and opportunities.
precipitation and shrinking glaciers, both CDP Water Disclosure raises businesses’
of which are already reported in the IPCC’s awareness and understanding of water-related
Fourth Assessment report, are affecting issues by requesting that they measure and
the supply of this critical resource. Pollution disclose high quality information on these
adds an additional layer of complication. issues. This puts them in a position to take
Meanwhile demand for freshwater is growing action and improve performance. Importantly,
inexorably due to a rapidly rising world the information collected by CDP Water
population, urbanization and rising per capita Disclosure is made available to investors and
consumption. The result, according to an other stakeholders for integration into their
OECD forecast, is that 47% of the world’s investment decision making, thus replicating
population will be living in areas of high the tried-and-tested approach that CDP has
92%
water stress by 2030 unless new policies pioneered for carbon and climate change.
are introduced and leading to changes to
how water is used. In 2010 CDP Water Disclosure will send
a questionnaire on behalf of institutional
Here at the Carbon Disclosure Project (CDP) investors to approximately 300 of the
we repeatedly hear from investors that water world’s largest corporations in water
Of FTSE 100 and FTSE 350 is an increasingly important issue to them. intensive sectors including chemicals,
companies agree that a water In its 2008 report “Watching water: A guide FMCGs, food and beverage, mining, paper
crisis is looming. to evaluating corporate risks in a thirsty and forest products, pharmaceuticals, power
world”, JP Morgan Global Equity Research generation and semiconductor manufacturing.
recommended that investors assess the The questionnaire will ask companies for
reliance of their portfolios on water resources information on their water usage, the risks
and their vulnerability to water availability and opportunities in their own operations
and pollution. While a recent survey by WSP and their supply chains, and their water
Environment & Energy of 100 companies from management and improvement plans.
the FTSE 100 and FTSE 350 found that 92%
agree that a water crisis is looming and 70% There are challenges to be overcome.
believe that the risks of water scarcity are Whereas it does not matter whether a tonne
equal to those of carbon emissions. of CO2 is emitted in Sydney or Stockholm in
terms of environmental impact, the impact
With a looming Companies’ water risks take a number of of extracting a cubic metre of water varies
water crisis forms, including disruptions to supply within
their own operations or their supply chains;
enormously with geography. The ‘type’ of
water used – ‘blue’ water from rivers, lakes
business does regulation that increases the price of water or underground aquifers, or ‘green’ rainwater
not have the or restricts its availability to particular
businesses or sectors; and reputational
stored in the soil as soil moisture – also
matters, as does the quality of the water
luxury of time issues around the use of this shared, both before and after it is used.
life-sustaining resource.
As businesses increasingly tackle the issue
In the face of a looming crisis, what can be of water, accepted standards will need to be
done by companies simply trying to carry adopted for measuring and reporting water
out their normal operations? The answer to use. While CDP Water Disclosure will not seek
this is ‘a huge amount’. By considering water to develop these standards, we will work with
as a strategic issue, companies will not only the leading global organisations (such as GRI,
be able to take action to mitigate these risks WBCSD, CEO Water Mandate, WWF and the
70%
in a cost-effective way, but also seize Water Footprint Network) to facilitate
opportunities such as reducing their operating the adoption of emerging best practice in
costs through efficiency measures, helping these areas.
shape the regulatory framework they operate
in, or capturing market share by offering With a looming water crisis business does
water-efficient products that meet their not have the luxury of time. Raising awareness
customers’ needs. So having a positive effect of water usage, risk and opportunity is a vital
on the community and improving their social first step in tackling this issue. There is no
licence to operate. time to lose in starting on this journey.
Believe that the risks of water
scarcity are equal to those of
carbon emissions.

8. About us
Contact:
Emily Measor
Salterbaxter advise companies
emeasor@salterbaxter.com
Tel +44 (0)20 7229 5720
on strategy, branding, corporate
communications and design –
providing creative communications
The Directions Supplements
support our main Directions
report. The main report is
published each year and is
now regarded as the UK’s
for big business issues.
most comprehensive analysis
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CR communications. If you for our clients including brand strategy and implementation, annual
want a copy, call us on the reports, digital communications and employee engagement. But we are
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directions@salterbaxter.com
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