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Planet, Health, Natural Capital & The Environment

Think globally, act locally: new guidance for companies on sustainable water use

CDP | Aug 21, 2019

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This article was originally published by CDP and is republished with permission.

Written by Christina Copeland, Senior Manager, Water Security

To succeed and thrive, businesses need a reliable water supply.

But challenges such as rising water consumption, pollution and unstable precipitation exacerbated by climate change are putting water sources under increasing pressure – and that can impact companies profoundly.

This year, CDP’s Global Water Report found that 75% of companies disclosing to CDP now report water risk exposure – a number that has continued to rise over the years.

Water-dependent companies are likely to be acutely aware of the risks they face, and more and more are setting targets to use water more efficiently. But until now, those companies had little guidance on how to set robust water targets that reflect local context – and as any site manager will know, the specific water concerns of one facility can vary greatly from others in a different location.

Site-level water targets

To tackle this, a collaborative effort between CDP, the CEO Water Mandate, the Pacific Institute, The Nature Conservancy, UNEP-DHI, World Resources Institute and WWF has produced guidance for companies on how to set site-level water targets that reflect both the local context and global shared goals for water use.

Our aim is to give companies a resource to help guide decision making and target setting. On August 27, CDP is excited to be releasing this guidance alongside these partner organizations.

Site-level targets are water-related targets that reflect a facility’s local context and its specific geographical challenges.

They can be used by site-level water and business managers to inform actions and drive performance to reduce water risks, realize opportunities and contribute to water security. At the same time, site-level water targets should align to SDG 6 targets.

What should a water target include?

The guidance stipulates that targets:

  • are informed by the most current science;
  • respect the river basin’s environmental, economic and social needs;
  • consider current and future conditions;
  • support public sector objectives;
  • consider industry leading practice; and
  • are rooted in achieving long-term water security for all water users.

The process requires an understanding of the contextual issues outlined above, to inform an assessment of current baseline conditions and a site’s contribution to the strategic goal of reducing or eliminating water challenges in the river basin.

It’s an approach intended for companies at any maturity level in their water stewardship journey (and includes several ways for users to set targets depending on resources, capacity and expertise) and is evolving through field testing by companies in diverse settings in Southern California, South Africa, India and Brazil.

Why now?

As our Global Water Report found earlier this year, companies are not moving fast enough to reduce water consumption and responsibly manage water use within their operations.

Effective water target setting and reporting is a powerful tool that benefits companies and investors alike, while protecting precious waterways. Researchers have found a strong correlation between a company’s financial performance and an effective goal setting process.

One of CDP’s roles in advancing effective target setting is rooted in a key benefit of our questionnaires: standardizing environmental approaches taken by companies, as well as the resulting data used by investors and others.

We will be looking at ways in which we can further evolve our water targets questions to ensure that business strategy and targets are informed by and aligned with local water context.

Site-level guidance and CDP disclosure

Companies disclosing to CDP will likely have questions about how the new site-level guidance will be incorporated into our annual water security questionnaire.

Since 2018, CDP has asked companies to share the level at which they set water targets, such as company-wide; business activity; brand/product; site/facility; country-level; and basin-level, and to describe their approach to how targets are set.

While there can be company-wide targets that align with basin needs, data from this question provides insight into how many companies are currently setting site-level water targets.

An analysis of the nearly 800 publicly listed companies that responded to CDP’s investor request for water information in 2018 found that 30% have water targets at both the company and site level.

CDP’s Water Security questionnaire also requests details of targets, but only for those monitored at the corporate level. We currently ask for metrics such as the year of the baseline, start and end date; the percent of the target achieved; a qualitative description of the target; and drop-down menus for the primary motivation and the metric for the target (the full text is available here).

CDP wants to hear from both companies and investors about what metrics are most useful for demonstrating that targets being set are meaningful. The consultation period for proposed developments to all CDP corporate questionnaires is open until August 23rd, and we’d greatly appreciate your feedback.

For data users, we’d like to know: what additional information on water-related targets would assist your investment (or other) decisions?

From both data users and companies, we’re seeking insights to inform our review of the section on water targets and goals, including suggestions of specific data points related to the robustness of water-related targets.

CDP operates best when company and investor input shapes the questions we ask in our annual questionnaires.

We believe the release of site-level water target guidance this month will help all companies align their specific locational needs with the demands of the current water crisis.

To help us to help you further, we need your input on how we can collect the most pertinent information in future water security questionnaires, so that we can work alongside you to protect precious water resources across the globe.

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