Search

A special on-pack promotion aims to raise £250,000 to help thousands of children in Angola to have clean and safe toilets.

Toilet tissue brand, Andrex (owned by Kimberly Clark), has joined forces with the children’s organisation, UNICEF, in a new partnership that will help provide communities in Angola with access to safe and clean toilets.

Speaking at Sustainable Brands London ’14 this week, Noam Buchalter, European marketing manager at Kimberly-Clark, said that the Angolan pilot would hopefully lead to a global roll-out.

The company says that Angola has one of the worst sanitation problems in the world with a quarter of the population (24%) not having access to safe, clean toilets. 

The new Andrex and UNICEF partnership will fund a community programme in Angola that educates children and their families about the importance of sanitation. A 25p donation from every pack of Andrex Classic White 9 Roll at Sainsbury’s  will go towards UNICEF’s Community Led Total Sanitation (CLTS) programme in Angola to help communities get one step closer to clean and safe toilets. 

This year, Andrex aims to raise £250,000 from the UNICEF on-pack partnership.  

Extending the average life of clothes by just three months of active use could lead to a significant reduction in carbon, water and waste footprints, claimed Novozymes at this week’s Sustainable Brands London’14 event.

With Marks & Spencer and Tesco now exploiting ‘biopolishing’ in their respective ‘Stay New’ and ‘As New’ clothing lines, Christian Wieth, senior global marketing manager of the Danish enzyme company, told Ethical Performance that he hoped other fashion brands and retailers would follow their lead.

Biopolishing is an enzyme application process which extends the life of cotton clothes by inhibiting the pilling process. And by extending the life – and look – of clothes, Novozyme research shows that extending the average life of clothes by just three months of active use would lead to a 5-10% reduction in each of the carbon, water and waste footprints.

Wieth added: “We have also surveyed consumers in Denmark and France on how they value biopolished garments, and one of the many conclusions is that 90 % will pay €3 more when they see the superior look after 10 and 20 washes. Also, biopolishing saves 540 litre water per t-shirt.”
 

Hotelier Radisson Blu has teamed up with City Car Club, the UK’s leading independent car club, to help improve air quality on Edinburgh’s streets by providing access to a convenient, low-carbon mode of transport.

The newly formed partnership has resulted in the arrival of a brand new Toyota Prius Plug-in Hybrid EV located at the Radisson Blu hotel on Edinburgh’s Royal Mile. The electric vehicle is available to use as part of City Car Club’s pay-as-you-drive approach to motoring – a scheme which has already been widely adopted in the Scottish capital.

The Prius Plug-in arrives as part of the hotel’s on-going transport development plan which already sees 80% of its employees and guests using public transport. The hybrid electric car will then take this a step further by providing those associated with the hotel, plus residents and businesses in the area, with on-demand access to an eco-friendly vehicle.

Graeme Gibson, General Manager of the Radisson Blu hotel explains “Having this type of vehicle in the heart of the city will be of great benefit to residents and businesses. It will also enable our staff and guests to use a sustainable means of transport when they need to get around by car.”

City Car Club has been a staple fixture in Edinburgh’s transport system for more than a decade and has close to 5000 members using over 130 low-emission vehicles across the city.

The partnership with Radisson Blu comes at a point where the car club is also preparing to introduce 20 electric vehicles across Edinburgh and Glasgow as part of the Scottish Government’s plans to reduce levels of air pollution across the country.
 

Two thirds of the world’s largest companies are reporting exposure to water risks, some of which have potential to limit growth. The news comes amid mounting shareholder concern around the business impacts from water scarcity, accessibility and poor water quality.

The latest annual global water report, released by CDP, the NGO that drives sustainable economies and holds the largest collection of company-reported environmental data, finds that 68% of businesses report exposure to water risk which could generate a substantive change in their business, operations or revenue. Twenty-two percent of companies anticipate that issues around water could limit the growth of their business.

The analysis is based on the water management data of 174 companies listed on the FTSE Global 500 Equity Index provided to CDP at the request of 573 institutional investors with US$60 trillion in assets. The number of investors pressing for corporate accountability on water and related information through CDP has increased by more than 300% since 2010, reflecting growing shareholder attention to water challenges.

Given almost half of the 853 reported risks - such as closure of operations and decrease in shareholder value - are expected to impact now or in the next three years, companies could quickly find themselves at a competitive disadvantage. In addition, the report highlights that water pressures will be most keenly felt in emerging markets where companies see new opportunities for growth, such as Brazil, China, India and Mexico. 

Companies such as Diageo, H&M, Merck and Unilever are, however, beginning to respond to this risk, with three quarters of companies evaluating how water quality and quantity affects their growth strategy. This change comes as water increasingly moves from an operational issue into the boardroom: ultimate responsibility for water issues lies at board level in 62% of respondents, up from 58% in 2013, with the vast majority of companies (90%) integrating water into their group-wide business strategies and 82% setting goals and targets to reduce water use.

You can access the full report here.
 

Climate change could be disrupting the relationship between bees and plants according to new research from the University of East Anglia (UEA).

A just published study reveals that warmer springs cause changes in the life cycle of bees – throwing them out of synchronisation with the plants they pollinate.The research is the first clear example of the potential for climate change to disrupt critical co-evolutionary relationships between species. 

Researchers studied long-term trends in historical records dating back to 1848. Records of a solitary bee (Andrena nigroaenea) from museum specimens were compared with the records of flowering time of the Early Spider Orchid (Ophrys sphegodes) and Met Office climate records.

They found that warmer springs cause orchids to flower earlier. But this does not correspond exactly with the earlier flying of the bees.The study shows that male bees fly around nine days earlier for each degree increase in average early spring temperature. Meanwhile female bees emerge slightly later than males, near peak orchid pollination time. 

Researcher Dr Karen Robbirt from UEA’s School of Biological Sciences said: “These orchids have evolved so that when Spring comes, their flowers appear at the same time as this specific bee - making pollination possible. But we have shown that plants and their pollinators show different responses to climate change, and that warming will widen the timeline between bees and flowers emerging. If replicated in less specific systems, this could have severe implications for crop productivity.” 
 

Reward employees who uphold company values, says a new guide from the Institute of Business Ethics (IBE). 

Knowing that they will be appraised on how they do business as well as what they achieve will increase employees’ sensitivity to the ethical matters they may confront in their day-to-day business, maintains the Institute.

While performance management has a major influence on how employees perceive the company they work for and on how they behave, a recent IBE survey exploring corporate ethics policies and programmes found that more than 40% of FTSE 350 companies do not include ethics in employee performance appraisals.

Performance Management for an Ethical Culture: an IBE Good Practice Guide considers how organisations develop performance management processes which measure the ‘how’ as well as the ‘what’.

Drawing on interviews and surveys with IBE subscriber companies and other organisations, the Guide suggests how to address the challenges that may be faced when integrating company values and ethical behaviour into performance management. 

Ruth Steinholtz, author of the Good Practice Guide, said: “When an organisation measures their employees’ performance in terms of both what they have achieved, and how it has been achieved, it shows a real commitment to creating an ethical culture. Organisations that celebrate integrity in the workplace will find that not only will they retain employees committed to values, but they will attract top talent too.” 

Philippa Foster Back CBE, IBE’s Director said: “Scandals involving bribery, such as Siemens and GSK and mis-selling, like PPI, have shown that the ends do not justify the means. A company can make a clear commitment to ethics by rewarding employees who do their business ethically. This Good Practice Guide will help organisations use their performance management process to embed ethical values into business practice and sustain a culture of high ethical standards.“
 

An early adopter of organic cotton and the first major brand to bring Fair Trade apparel to market, prAna has now joined the growing list of beloved green brands (think Annie’s Homegrown, Burt’s Bees, Tom’s of Maine) to be gobbled up by the big guys. The California-based lifestyle brand best known for its climbing and yoga apparel was recently acquired by Columbia Sportswear – a move that will not only help the parent company, a historically cold-weather sports brand, expand its offering, but will also fortify the smaller brand with an operations platform that can help its sustainability mantra reach new global markets.

PrAna’s commitment to sustainability has set it apart from the rest from the start. In its early days, prAna’s founders would cut and sew clothing in their garage, craft hangtags made with homemade recycled paper, and ship orders to customers in boxes gathered from the local grocery store. The company was also an early proponent of renewable energy within the apparel industry, pioneering wind power through its Natural Power Initiative, for which it was recognized as an EPA Green Power Partner. PrAna has come a long way from making its garments in garages and delivering clothes in fruit boxes – today the company's products are sold at 1,400 specialty retailers across the United States, Canada, Europe and Asia and its sales are expected to hit more than $100 million this year. All of this is expected to continue to grow in the wake of Columbia’s acquisition. The question on everybody’s minds is: “Will this acquisition change the company’s commitment to sustainability?”

In an age when more and more socially and environmentally responsible companies are being bought to help diversify big corporate portfolios, what can we learn from a company that has woven sustainability into its business from day one and has consistently sought to strike a fine balance between commerce and idealism? I spoke with prAna CEO Scott Kerslake to hear more about what this new corporate partnership will mean to a company named after the ancient Sanskrit word for “life force,” and how the brand has set its intention to keep it real.

TriplePundit: PrAna has grown at an annual rate of more than 30 percent since 2010, and during that time the company has also been able to amplify its commitment to sustainability – making such strides as increasing its use of organic cotton from 27 percent to 63 percent in two years, and changing its product packaging to avoid using low density polyethylene plastic bags, which has helped the brand save over 31,000 lbs of plastic in three years. Why do you think prAna has been able to successfully embed sustainability into its corporate strategy, while still being able to continue to grow its business?

Scott Kerslake: When I came to prAna [in 2009], the company was already known for sustainability, but there was no real game plan. I got together with our director of sustainability and we created a strategic plan that we still follow to this day. Our framework focuses on three areas: 1) the materials that go into making our products, 2) the materials that we need to do business every day, and 3) the human angle, working conditions. These three buckets have been our guiding principles. Beyond having this framework, though, it’s the people at prAna who are making [sustainability] happen here.

At prAna, we’re attracting people who have it in their being to make decisions based on their values. As a business, you have to hire those types of people and empower them. That’s where the rubber meets the road. There’s always going to be tension between wanting to use a certain textile because it’s less expensive or more attractive, and choosing something that’s more sustainable. But people at prAna are already dialed into sustainability from a day-to-day perspective. That’s a huge advantage.

One thing that is important at prAna is the concept of seva – service without the expectation of return. People treat each other exceptionally well here. People ask themselves, “How can we be of service to our community?” Sustainability is a natural extension of that. It’s something that connects people back to the idea of service, and it’s a normal part of our business.

3p: PrAna’s focus on environmental and social consciousness has been a critical differentiator in the marketplace and has perhaps helped bolster the company’s growth. Yet, there still remain many business leaders across the country – from local, mom-and-pop shops to Fortune 500s – who view sustainability as a “nice to have” and not as something that will fundamentally benefit their company’s bottom line. What do you think will help move the needle among those skeptics?

SK: It’s not surprising that some are skeptical of what sustainability can contribute to a business. I can see both sides of this, especially in an industry that focuses on nickels and dimes. Sustainability has a huge impact. If you want to have better working conditions, you have to pay people more. If you want to have sustainably sourced textiles, you have to pay more. Cotton is a great example of this. At the end of the day, it’s about what the company stands for. Many companies view their sole purpose is to grow profits; to me, that’s a narrow view. When you think that there are a finite amount of resources on the planet, you realize that it’s a race to the bottom.

It’s hard to convince skeptics, though the only way to do it is to go to the facts. You say, “Here’s the finite resources, and if everyone keeps going in this direction, here’s what will happen.” It’s not a sustainable model. It’s like trying to convince people about global warming. Once you look at the evidence, there’s no disputing it.

…Once there’s that understanding of the limited resources, there are three things you need to ensure that sustainability is embedded within your company and doesn’t become a silo. First, you have to have support from the top; if it’s not, people will shoot down things in a heartbeat. You have to have full-on support from the top, otherwise it’s never going to fly. Second, you have to have internal evangelists who are passionate about sustainability and want to see change and help move things forward. And third, you have to have a game plan.

3p: There are many stories we hear about CEO sustainability “aha” moments (i.e. Interface’s Ray Anderson and Wal-Mart’s Lee Scott). Was there a turning point for you when the link between sustainability and corporate strategy became more evident?

SK: There was never a sexy moment in time like that for me. I wish I could tell you that I was on top of a mountain, riding my bike, and then “aha” – it wasn’t like that. The outdoors has always been a sacred place for me, and that connection was always intuitive for me. It was not an intellectual thing, it was a values-based, intuitive thing. I’m connected to my internal compass, to my values. To me sustainability is an extension of that. There was never an “aha” moment for me because I try to connect my day-to-day living to my values. Not living your values seems incongruous to me. I appreciate the beauty of nature, and I think you’d have to be like a complete ostrich to not acknowledge that we need to help save some of that beauty.

3p: How did sustainability factor into the Columbia deal? And how do you envision that prAna could influence how Columbia approaches its own corporate sustainability strategy?

SK: One of the reasons Columbia acquired us is because they know we’re tapping into the conscious consumer, and that segment is wising up to the fact that sustainability matters. The people at Columbia were smart to see that. And that’s a huge reason why they partnered with us, and we partnered with them. PrAna has always been ahead of its time, and we’re now meeting with the evolution of that culture.

With this partnership, prAna has the opportunity to influence the broader culture on sustainability issues, and be a platform for change. My goal is to shift Columbia’s view of sustainability so we can influence change there. That’s the subversive, fun part for me. It’s about educating and shifting. There’s nobody that brings quality product and technology to market for accessible prices like Columbia. They’ve been successful at that. So the way we see it’s, “How can we move Columbia to Fair Trade?”

3p: When a cherished, green brand is acquired by a multinational corporation, there’s inevitably some concern that the brand will alter its commitment to sustainability. We’ve seen this public backlash surface with the acquisitions of the likes of Honest Tea, Tom’s of Maine, and most recently Annie’s Homegrown. Now that prAna is owned by Columbia, do you think there are some loyal consumers who might be worried about the company shifting its stance on sustainability?

SK: General Mills recently bought Annie’s, and I bet people are worried. I can understand that reaction. When people are passionate about a brand, and that brand is acquired by a company they’re not passionate about, the question becomes “Where’s the compass? How do you keep connecting to that compass?” Right now, prAna is a brand that has the power to influence. I want to get it out there to people who would never find us if they don’t shop at REI or certain places. My vision is to open the aperture [of the company] without compromising the integrity and culture of this family, and continue to make progress in sustainability.

The proof [will be] in the pudding. Two years from now, if we have gone to all conventional cotton and we don’t use hemp and we don’t use recycled poly, the skeptics will be right. So my job is to prove them wrong, and keep leading a company that’s aligned with its values. Give me five years at Columbia and I’ll give you a better answer.

Image credit: Pixabay

All eyes are on the IPCC report this week. But the global panel isn’t the only one sounding the alarm. Last month, as if in anticipation of the IPCC’s latest release, the Pentagon did its own alarm-sounding: Climate change issues are a real risk and need to be considered in the interest of national security.

Now, I know what you are probably thinking: the Pentagon? When has this country’s military nerve center ever sounded out about climate change?

But really, who else is going to have the finger on the pulse when it comes to the political and social impacts of global warming?

Well, except for climate risk analysts like Maplecroft.

Last month, also in preparation for the IPCC’s sonorous warnings, U.K.-based Maplecroft released a report detailing the 32 countries that are at risk for increased wars and terrorism due to the effects of climate change. They include regions that have already been subject to war and insurgent attacks: India, Ethiopia, Nigeria and the Philippines. The report breaks down the areas that are at “extreme risk.” Just a few of those are Sudan, South Sudan, Afghanistan and the Congo. Twenty-one other areas, not on the “extreme list,” are also of concern. While political strife may not currently be a high factor in their region, food security is still expected to get worse, and the reasons are the same as for the political strife in other countries: drought, sea-level changes, extreme weather patterns and the destruction of much-needed infrastructure.

Maplecroft’s report offers a bright side, however: It echoes the IPCC’s viewpoint that adaptation, as well as mitigation, can help reduce the effects of climate change.

“An improved understanding of the science and consequences of climate change highlighted by the recent IPCC Fifth Assessment Report offers hope that adaptation strategies can be developed to avoid the worst impacts,” say the authors, who point suggest that innovations like drought resistant crops, improved economic strategies, and poverty reduction mechanisms all play a part in combating the effects of climate change.

Other organizations are also sounding the alarm, such as the Earth System Science Center in Brazil, which is documenting the effects of disappearing regions of South America’s once vast Amazon rainforest. Antonio Nobre, the principal researcher for the the center's report, said the analysis wasn’t written for the IPCC or the experts in this field.

“It’s not written in academic language. I don’t need to preach to the converted. Our community is already very alarmed at what is going on,” Nobre told the Guardian.

That may be one of the more helpful and convincing aspects of this growing compendium of reports: It speaks to the average reader who doesn’t need to navigate through pages of technical data to get to the assumption that the world’s climate is on a tipping point.

As for the Pentagon, it is in the process of compiling a report on those military bases that may be at risk from climate change. At more than 6,000 around the world, there is reason for concern, says the Pentagon. That includes installations in Virginia’s troubled Chesapeake Bay, where sea levels may rise as much as 7 feet in the next 75 years.

Experts note that the Pentagon’s 2014 Climate Change Adaptation Roadmap signals a divergence for an organization that, in the words of Francesco Femia, co-director of Center for Climate and Security, “is not looking out into the future, it's looking at what's happening now” and preparing for adverse outcomes.

Image of GHG by source; 55 percent is from fossil fuels and man-made sources: IPCC Synthesis Report 2014

Image of slash and burn techniques in Amazon Forest: Matt Zimmerman

Last month, German sportswear giant, The Adidas Group (Adidas), quietly released its “Third Party Complaint Process for Breaches to the Adidas Group Workplace Standards or Violations of International Human Rights Norms” (the Process).  Although the document is not perfect, and it is impossible to fairly evaluate the process without examining how it functions in practice, Adidas appears to have created a strong grievance mechanism that passes muster under the United Nations Guiding Principles on Business & Human Rights.

What did Adidas do?

Introduction: The document containing the new Adidas Process opens with a bold pronouncement:  “The Adidas Group is committed to operating as a sustainable business which is environmentally sound, respects human rights and ensures fair, safe and healthy working conditions across our global supply chain.”  The Process was designed to help Adidas satisfy these commitments.

The company points out that it already has a “worker’s rights complaint process,” which has been in effect for more that 10 years, and that this grievance mechanism builds on that process.  The other model for the new process, we are told, was the grievance mechanism established by the London Organizing Committee for the 2012 Summer Olympic Games’ (LOCOG), with which Adidas is uniquely familiar.  (On four separate occasions in 2012, Adidas was accused of violating LOCOG's responsible sourcing code and had to avail itself of the LOCOG grievance process.)

The detail:  The key aspects of the Process are as follows:

• In order to make a valid complaint, the complaining party must allege a breach of an international human rights norm (or Adidas’ Workplace Standards)


• Anyone directly affected by adidas or its supply chain can make a complaint (or any organization representing such a party)


• Complaints can be made via hotline or by email (sustainability@adidas-Group.com)


• If a complaint is accepted, all parties will be contacted and briefed on the process


• Adidas’ Social and Environmental Affairs (SEA) division will then conduct an investigation, including in-person interviews and, potentially, engagement with community and/or civil society stakeholders


• SEA’s findings will be shared with all parties (broadly defined)


• Where an Adidas entity caused or directly contributed to a violation it will cease or alter the offending behavior and engage in remediation where necessary


• SEA will monitor the remediation activities

What do the Guiding Principles require?

Pursuant to the United Nations Guiding Principles on Business & Human Rights (the Guiding Principles), business enterprises should “establish or participate in effective operational-level grievance mechanisms for individuals and communities who may be adversely impacted” (Guiding Principle 28).  The purpose of a business-sponsored grievance mechanism is to ensure that harms are “addressed early and remediated directly.”

According to the U.N. Office of the High Commissioner for Human Rights (OHCHR), a company “need not” require that a complaint rise to the level of an actual human rights violation before it can be raised.  Rather, a company should seek to identify any “legitimate concerns” of those who may be adversely impacted by the company’s activities.

The Guiding Principles themselves identify additional features of effective non-judicial grievance mechanisms (Guiding Principle 31).  They should:

• Foster trust among stakeholders


• Be known to all stakeholder groups for whose use they are intended


• Provide a clear and known procedure


• Ensure that aggrieved parties can engage in a grievance process on fair, informed and respectful terms


• Keep parties to a grievance informed about its progress


• Ensure that outcomes and remedies are consistent with internationally recognized human rights


• Identify lessons for improving the mechanism and preventing future grievances and harms


• Be based on engagement and dialogue with relevant stakeholder groups

The Guiding Principles further provide that a company is only obligated to provide or contribute to a remedy where the business “caused or contributed to” the alleged adverse human rights impacts.

Build on existing processes: As the Guiding Principles gurus at Shift point out, it is not uncommon for a company-sponsored grievance mechanism to involve or touch upon other remediative systems already in place at a company -- what Shift calls a company’s remediation “ecosystem."  These may include whistleblower hotlines, HR or consumer complaint processes, auditing procedures and trade union engagement procedures, to name a few.

Importantly, the Guiding Principles do not require companies to create separate “human rights” grievance mechanisms.  Instead, where a remediation “ecosystem” is already in place, a company should leverage existing processes while ensuring that there are no gaps between what exists and what is required by international law.  Where such gaps do exist, they must be plugged, but the company needn’t start from scratch.

Importance of stakeholder engagement: At a Shift workshop in May on the topic of grievance mechanisms, business leaders highlighted the link between stakeholder engagement and an effective grievance mechanism.  They noted that, where stakeholders do not trust a company, they are unlikely to avail themselves of a company-sponsored grievance process in the first place, so stakeholder engagement that builds trust between the company and the community at the outset is crucial to future success.

Does Adidas measure up?

On the face of the Process, the short answer appears to be: Yes, Adidas established a grievance mechanism that satisfies the Guiding Principles and is therefore compliant with international law.  However, much of the Process’ success depends upon its implementation and use.

The good:  On the surface, the Process does a few key things well.  For one, it is clear and described in sufficient detail.  It also allows for (but does not mandate) engagement with various stakeholder groups, something that is strongly encouraged by the Guiding Principles, the OHCHR commentary and the business leaders interviewed by Shift.  The Process acknowledges the importance of transparency and that all parties remain fully informed throughout.  It builds upon existing grievance mechanisms, rather than simply adding another layer to the “ecosystem.”  Finally, the Process calls for remediation and monitoring where an adidas entity caused or directly contributed to a harm -- the standard articulated by the Guiding Principles.

The bad:  The primary shortcoming of the Process, at least as it reads, seems to be that it requires complaints to allege a “breach” of an international human rights norm in order for Adidas to initiate an investigation.  This is contrary to the OHCHR’s recommendation that a company seek to identify any “legitimate” human rights concerns.  A stronger position would be for Adidas to accept any complaints that allege human rights impacts, and then use the investigation process to determine whether or not a breach occurred.  The concern here is that Adidas will filter out complaints that, while insufficient to require remediation nevertheless deserve the company's attention -- particularly where the alleged misconduct could devolve into a human rights violation down the road.

The unknown:  Much about the Process' success and legitimacy is difficult to determine at this stage.  For instance, on the face of the document, it is impossible to know how the Process was developed.  Adidas does not tell us whether or not it engaged with stakeholders, only that it used its experience with the LOCOG mechanism as a model.  We also cannot know whether it will foster trust, whether it will be known to all relevant parties, or whether outcomes will satisfy internationally recognized human rights.

Nevertheless, Adidas should be commended for putting together what appears to be a robust process and for acknowledging its role in preventing and remediating human rights violations.

Image credit: Flickr/sneakerphotography

Whether it's greenhouse gas emissions, deforestation and climate change, waste management and recycling, or water usage, investors and businesses are increasingly sensitive and exposed to the risks environmental crises pose to the financial bottom line.

Yesterday, CDP (formerly known as the Carbon Disclosure Project) released the CDP Global Water Report 2014: From water risk to value creation. Representing 573 professional investment management companies responsible for managing a mind-boggling $60 trillion in assets, CDP surveyed 174 of the world's largest companies regarding their water usage, their exposure to threats to water resources and how they are, or are planning, to cope.

Indicative of the widespread risks and seriousness of the threats to water resources they perceive, more than two-thirds (68 percent) of survey respondents reported exposure to water risk. Ninety percent are integrating water resource management into group-wide business strategies, and 82 percent are setting goals and targets to reduce water use.

Water: A growing risk to businesses and society

Ongoing drought in California and across the U.S. West has brought home the harsh realities water shortages and poor water quality can have on businesses and communities.

An international NGO founded in 2000 to promote and foster accountability, transparency and adoption of standardized reporting for companies' carbon and greenhouse gas emissions, CDP has since expanded. Over the years, it launched programs that promote sustainability standards, transparency and reporting for cities, supply chains, forest and water resources. In 2010, U.K-based CDP established its Water Program.

Indicative of just how quickly and to what extent water resource use and management has emerged as an issue of serious interest and concern for shareholders, boards and business managers, the number of investors calling for corporate accountability regarding water and related information through CDP has increased over 300 percent since 2010.

Nearly half the reported water risks elaborated in CDP's water report are expected to negatively impact businesses now or in the next three years. These include shutting down operations and share price declines. All that spells trouble for shareholders, company directors, management, employees, business partners and customers.

Growing recognition of water risks, actions on the part of multinational businesses

Notably, pressures on water resources will be felt most in emerging markets, such as Brazil, China, India and Mexico, where middle classes have begun to develop and expand and where the world's multinationals and largest companies see the greatest opportunities for growth, according to CDP's report. The largest and wealthiest city in South America – Brazil's Sao Paolo – is in the midst of a socially, politically and economically debilitating water crisis, CDP notes.

Commenting on the results of CDP's 2014 Global Water Report, CEO Paul Simpson stated:

"Water is an essential resource for any business. The potential for water-related problems to damage brand value or limit corporate growth is increasingly understood."

The 174 multinational companies that make up the FTSE Global 500 Equity Index responded to the latest annual CDP global water report. Respondents, such as Diageo, H&M, Merck and Unilever, are responding to the increased risks lack of access to water or poor water quality poses to their businesses. Three-quarters said they are evaluating how water quality and quantity affects their growth strategies.

Initiatives to boost water efficiency and assure sustainable access to water resources is resulting in benefits, as well as challenges, CDP reports. Three-quarters of companies reported that water opens up operational, strategic or market opportunities.

CDP cites the example of German chemicals multinational BASF, which estimates that water saving, recycling, reuse and drinking water treatment products holds out the prospect of US$1 billion in sales to 2020. Cisco, for its part, is saving US$1 million a year worth of water as a result of change to a soldering practice.

Water risk disclosure: Management responses lag investor demands

Despite growing water risks, their material impact on businesses and calls by investors for greater water accountability and public reporting, “disclosure levels of the Global 500 have not kept up with investor demand for information, stagnating over the past year,” CDP highlights.

Forty-two percent of the companies who received requests from investors to disclose information related to water risks have failed to do so. According to CDP, “The energy sector has the lowest level of disclossure, despite companies in this sector reporting high levels of exposure to risk.”

Besides the world's largest integrated oil and gas company – Exxon Mobil – Nike was identified as “the largest persistent non-disclosing companies by market capitalization and identified as having potetially the greatest impact on water resources.”

“We live in a time of unprecedented demand for water and have seen the number of investors seeking accountability from companies on this issue through CDP rise more than four-fold in just four years,” Simpson commented. “It is of grave concern that such a significant group of companies is failing to communicate management of water risks to their shareholders through our global system.”

Added Constantina Bichta, manager for environmental, social and governance research at Boston Common Asset Management: “If water scarcity prevails, companies could face constraints to growth.

“They may not be able to provide their core products and services, or may lose the ability to expand their business. As investors in these companies, this is something we are deeply concerned about. Companies with large supply chains also run the risk of finding themselves in conflict with communities over access to water issues, thus putting their license to operate at risk."

*Images credit: CDP, Global Water Report 2014