A group of more than 60 major investment vehicles wants to up the pressure on how the food and drinks industry uses water.
The new consortium, covering US$9.8trn in assets, wants to “move” some of the world’s largest food and drinks companies on protecting resources and on making sure they see water as a financial risk to their businesses.
Through the Valuing Water Finance Initiative (VWFI), the consortium – which includes asset managers, pension funds and US state governments – wants to “engage” with more than 70 major consumer-goods companies and retailers on how they use water, on managing their consumption and on reducing pollution.
Ceres, a US non-profit focusing on sustainability issues, is a member of the consortium and said many companies in the food and drinks sector “have a long way to go in properly mitigating water risk”.
Kirsten James, senior programme director of water at Ceres, said there needs to be “the same urgency” in addressing water risk as there is in other environmental areas, such as carbon emissions.
She told Just Food manufacturers must act now on “the water crisis”, arguing “undervaluing water will pose great material risk for the food and beverage industry if left unaddressed”.
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James added: “The case for water is clear – we know that by 2030, global demand will exceed supply by 56%, and one needs only read the news to know the water crisis is compounding. Water management is a critical aspect of corporate sustainability, risk management and strategic planning, and it will be impossible to significantly advance climate change and water security without stronger private sector leadership.”
The VWFI consortium has published six “science-based, actionable expectations”, which are aligned with the UN’s Sustainable Development Goal for water and which investors can use in their conversations with manufacturers. These six focus areas centre on topics including water quantity, the quality of water in a company’s value chain and protecting ecosystems.
Asked what impact Ceres expects the VWFI to have on enacting real changes in the way companies use water, James said the initiative has “put the necessary resources and tools in place to guide investors through this journey” and to “enable evaluation, goal-setting and accountability”.
She added: “With these foundational materials and a framework for engagement in hand, investors will be able to focus on areas within corporate water stewardship that will lead to the greatest impacts. The companies of focus in the Valuing Water Finance Initiative are at different places in their water journey. Investors will meet a specific company where it is to identify key challenges and opportunities.”
Nevertheless, James highlighted an area for food and drinks companies to consider and upon which to act. “One area that has been identified as critical in mitigating water risk is around ensuring robust supplier policies,” she explained. “Many companies have not updated their supplier policies to align with organisational goals on climate and water and most language in supplier policies is largely that of encouragement over requirement. VWFI can spur companies to update their supplier policies to better reflect their commitments around water stewardship. Clear and robust supplier policies can not only help companies mitigate water risk and ensure quality service and product delivery, they can also lead to opportunities for innovation, partnership, and collaboration.”
Among the 72 companies the VWFI consortium plans to contact is Nestlé. Asked if the company had started discussions with the initiative, whether it had seen investor interest in water grow and to outline its efforts to cut its use, the world’s largest food maker said: “Ceres informed us of its Valuing Water Finance Initiative. We share Ceres’s ambition to better protect water systems. We have long-standing commitments and actions in this area and have set ambitious targets, such as the pledge by our [bottled] waters business to help advance the regeneration of local water cycles through more than 100 projects.
“Our waters business will ensure all of its operational sites will be certified by the Alliance for Water Stewardship standard by 2025. We are also working on a major global programme to source 50% of our key ingredients from regenerative agriculture by 2030, helping reduce carbon emissions and preserve natural resources, including water.”
Carlsberg, one of the world’s largest brewers, says its “relative water use” in the production of beer and soft drinks fell by 21% between 2015 and 2021 from 3.4 hl/hl to 2.7 hl/hl from 2015 to 2021. The Tuborg maker’s “absolute use”, including water use at its malting sites, dropped 16% over the same period, from 41.2 million cubic metres to 34.6 million cubic metres.
“We have set targets towards 2030. For our production sites, the target in 2030 is to get to 2 hl/hl and for our sites in high-risk areas the target is to get to 1.7 hl/hl,” a spokesperson said. “Further we will by 2030 replenish 100% of the water we consume in high-risk areas.” Using criteria drawn up by WWF, Carlsberg has identified 17 breweries as being in high-risk areas – in Cambodia, China, India, Laos and Nepal.
The spokesperson added: “Overall, the assessment and mitigating of water-related risks pose the biggest challenge. Assessing risks from water scarcity now and in the future enables us to target efforts to build the resilience of our business and better support the communities in which we operate.”
Diageo, one of the world’s biggest beverage alcohol companies and another of the companies the VWFI wants to work with, described water as “a big priority”.
A spokesperson said: “Our headline water goals [for 2030] are to improve our water efficiency by 40% in water-stressed areas and by 30% across the company, to replenish more water than we use for our operations for all our sites in water-stressed areas by 2025, invest in water, sanitation and hygiene (WASH), and engage in collective action on priority water basins.”