Has your company made the water stewardship A-list? - Sustainability Spotlight

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The latest report from the Carbon Disclosure Project (CDP), assessing companies' efforts on water, reveals a strong representation from drinks companies among those companies the project considers to be leaders in water stewardship. Ben Cooper reports.

Leading drinks firms from across different product categories have had their commitment to water stewardship recognised, with four major beverage producers featuring in the recently-published Carbon Disclosure Project (CDP) Water A List. This is the second year the CDP has published an A List, which comprises companies that "understand the sustainable management of water is a business imperative and are acting to improve water security for all".

The inclusion of Coca-Cola European Partners (CCEP), Diageo, Kirin and Suntory on the A List means drinks firms account for half of the eight companies from the 'Consumer Staples' category that make it onto the List, which in total includes just 24 of the 1,252 companies CDP contacted.

Add in Unilever, and beverage producers make up 20% of this list, which comprises companies that achieve CDP's highest rating of Leadership A. The CDP process categorises companies on four ascending levels of engagement: disclosure (D), awareness (C), management (B) and leadership (A).

Other drinks companies to achieve high ratings were Asahi, Heineken, Anheuser-Busch InBev, Coca-Cola Hellenic Bottling, Danone, Heineken, Nestle and SABMiller, all of which achieved a Leadership A - score, and Coca-Cola, PepsiCo, Brown-Forman, Distell and Pernod Ricard, which achieved a Management B rating. "We applaud the progressive steps drinks companies are taking in managing their water risks and taking advantage of opportunities," says Morgan Gillespy, head of water at CDP.

The findings are published in the CDP 2016 Corporate Water Disclosure report, entitled 'Thirsty business: Why water is vital to climate action'. A notable feature of the CDP work is that its assessments are produced on behalf of 643 investor signatories, holding US$67 trillion in assets. How does that serve to reflect how seriously water risk is being taken by the investment community?

Overall, CDP has expressed concerns about the general level of engagement across all business sectors, particularly given the escalating scale of risk. CDP found that disclosing companies reported US$14bn in water-related impacts this year, a five-fold increase from last year. However, companies "are not moving fast enough to address the sustainable management of water", the report says. Disclosure around tracking water use, assessing risk and ensuring strategic management indicates "performance has not improved markedly since last year".

Owing to particular sensitivities – and some controversies – that several major drinks companies have faced, the sector's leaders were among the earlier movers on water. This appears to be underlined by this latest report.

Indeed, reflecting on why drinks firms are performing better than many other companies, Gillespy echoes sentiments expressed by drinks companies themselves, relating to the particular challenges that they face on water. "Beverage companies are unique in that, for many, not only is water a critical resource, but it is a core ingredient in their products," Gillespy tells just-drinks. "As big, consumer-facing brands, they are also more likely to be exposed to reputational risk. Drinks companies know that they need to manage not only the physical risk to their business but also their reputational risk, ensuring continued licence to operate in an increasingly water-insecure world."

The CDP report shows it is not only the leading position of companies like CCEP and Diageo that underlines the drinks sector's engagement on water. Another positive indication of the industry's commitment is its overall engagement with the CDP process. The Consumer Staples category, in which they are placed, had an above-average showing, with 58% of the 175 companies contacted answering the questionnaire.

The response rate from drinks firms was far higher than that. Out of the 33 beverage producers contacted, 22 responded, a 67% response rate significantly higher than the global average of 45%.

CCEP says it owes its rating to "the hard work we've undertaken to minimise water impacts in our value chain, establish a water sustainable operation and set the standard for water efficiency". Interestingly, CCEP achieved a higher rating than The Coca-Cola Co, which underlined its own commitment to water stewardship two months ago with a headline-grabbing announcement on water replenishment.

However, in addition to gaining its Management B rating, which rival soft drinks giant PepsiCo also achieved, Coca-Cola was called out indirectly in CDP's assessment of its European bottling partner. The recognition confirms CCEP's important work in foot-printing impacts along its entire value chain. A value chain approach requires a collaborative approach with other companies involved at different points of the supply chain: CDP singled out CCEP as a case study in supply chain collaboration.

With around 80% of its water footprint coming from agricultural ingredients, including beet and cane sugars, fruit juices, coffee, and pulp and paper products, the necessity for CCEP to work with partners is clear.

The CDP report commended CCEP for committing to sustainably sourcing 100% of its key agricultural ingredients by 2020. To achieve this, the report highlights, the company has established a set of Sustainable Agriculture Guiding Principles (SAGPs) in conjunction with Coca-Cola Co.

When contacted by just-drinks, a Coca-Cola spokesperson pointed out that the group has engaged with the CDP water disclosure process every year since 2012, each year increasing the level of detail in response. Regarding its score this year, the spokesperson adds: "The CDP Water scoring has evolved each year and we are working to understand the basis for our score for 2016."

While Coca-Cola may appear a little bemused at not being among the elite in the CDP's eyes, its attainment of the B rating - and the fact that so many of the leading players from different drinks sectors achieved an A or B score - suggests the industry's resolve to engage positively on water - and address the risks water issues pose - is bearing fruit.

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