CDP’s water program helps institutional investors, companies and policy makers better understand the business risks and opportunities associated with water scarcity/stress and other water-related issues by increasing the availability of high quality business information on this critical issue.
Water is becoming an increasingly important strategic issue for businesses: in 2014, almost three quarters of Global 500 respondents (68%) report water poses a substantive risk to their business. For some respondents, anticipated financial impacts are as high as US$1 billion, and for the first time, almost a quarter (22%) report that issues around water could limit the growth of their business. Through increased disclosure, CDP believes that companies will be better positioned to both understand and manage water-related risks and that the information provided will drive better decision making by investors, policy makers and other interested stakeholders.
The CDP water questionnaire is sent to a subset of the:
- Australia ASX 100
- Europe 270
- Global 500
- Japan TSE 150
- S&P 500
- South Africa JSE 100
- South Korea
- Turkey 50
- UK FTSE 100
Only those companies in the most water-intensive sectors and those sectors most exposed to water-related risk have been selected.
Although we appreciate that some businesses may only require small volumes of water in their operations, if water is critical to these operations and it is no longer easily available to them due to drought, tighter regulations or abstraction limits, then their operations may be severely disrupted. Another area for consideration is water use in their supply chains which is also of concern to investors.
You will be given the opportunity to explain why you do not have this data and if you have plans to assess the risk from your supply chain in the future.
The cost of water does not reflect its true value to business, which instead lies in business continuity, licence to operate and brand value. For example, customers may stop buying products from a company they perceive to be a poor water steward. Also, governments may pass regulation reducing a company’s access to water, forcing it to cut production or move it, at great cost, to other locations. Investors need to know that companies are prepared for these potential risks.
The deadline for companies to respond is the 30 June 2015. We will offer limited extensions in line with standard CDP practice.
Submissions and revisions must be made by companies by 30 June 2015 to be included in the annual CDP reports. After this date, responses can only be amended by CDP staff and this may incur an administration fee. CDP cannot guarantee that changes made after 30 June 2015 will be reflected in the reports produced.
Yes, we welcome responses from any company. We do not include non-requested companies’ responses in the statistical analysis in the 2015 global water report but we quote from them to illustrate leading practice.
The 2015 version has maintained similar structure and content for 2015. Two important additions were added:
- Company-wide water accounting has been added to the Current State module to allow companies to demonstrate to investors that their risk assessments are informed with a good understanding of their water use and
- A new module called Linkage and trade-offs which asks companies to report any linkages or trade-offs between water and other environmental issues e.g. carbon management.
The 2015 water questionnaire is comprised of six modules, three of which broadly follow the three pillars of the CEO Water Mandate disclosure guidelines: ‘Current State’ which asks about the current state the company operates in; ‘Implications’ which asks companies to disclose water risks and opportunities; and ‘Response’ which covers topics including governance and strategy, compliance and targets and initiatives. CDP has included two further sections: the first on risk assessment, which asks companies to disclose the procedures and requirements their organizations follow for their risk assessment and the second on facility level water accounting which asks for advanced water accounting data and finally the new linkages and trade-offs module.
Responding companies may choose whether their responses are public or non-public. Public responses are accessible via our website in precisely the same way as for CDP’s climate change program.
CDP piloted the world’s first scoring methodology in 2014. This year, CDP aims to score all water responses received by 30 June from publicly listed companies in 2015. We are currently in negotiations to secure a water scoring partner. Companies should therefore utilize the CDP water scoring methodology when formulating their response. We will share more information with each company at the end of February and confirm those companies that will and won’t be scored at the end of March.
With regards to publishing scores, CDP proposes:
Individual company water scores, from both public and private respondents, will be shared with investors via CDP’s password protected investor portal.
Individual companies will receive their score as well as the ability to benchmark themselves against their peers in an anonymized fashion via score feedback charts.
CDP will not release a full Water Index in 2015. Instead we will focus communications on those companies that have achieved Leadership status. This allows CDP to create a positive race to the top while avoiding alienating those companies that are at the beginning of their water stewardship journey.