www.pwc.com
Parched: The Ripple
Effects of Drought on the
Value Chain
Strictly Private
and Confidential
Draft
July 2013
Lauren Kelley Koopman
PricewaterhouseCoopers
Sustainable Business Solutions
[email protected]
Draft
Why is water important to business?
Too little
Too much
Too dirty
Physical risk
• Quantity: Droughts and floods
• Quality: Spills and pollution
Regulatory risk
• Withdrawal permits
• Discharge requirements
Reputational risk
• Public opinion and consumer behavior
• Investor and shareholder relations
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Draft
How can companies manage water risk?
Corporate water management happens in three phases:
The UN Global Compact
• Pacific Institute
• PwC
• Carbon Disclosure
Project (CDP)
• World Resources
Institute (WRI)
• Global Reporting
Initiative (GRI)
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Implications
Current state
Context
Performance
Compliance
Response
Policies, targets &
governance
Business risks
Business opportunities
Internal actions
External
engagement
External impacts
Draft
Measuring and reporting on water use is the first step
Mandatory
Voluntary disclosure is becoming a “must have”…
Many companies are advised to disclose all information,
including water data, that could materially impact the firm’s
financial performance
disclosure of
water data is
One reporting NGO issued a voluntary guidance document for
sustainability reporting, includes a section on water metrics
and measurement
required by
numerous local
One NGO sends an annual water questionnaire to the world’s
largest publicly-held companies; responses are publicly available
and will be scored as soon as 2014
and federal
agencies
A sustainability index sends out an annual questionnaire to the
world’s largest publicly-held companies with a stand-alone
section on water risk
One news service’s environmental/social/governance company
profiles include water data from CDP Water and other sources
…and leading companies take a local perspective
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Implications
Current state
Context
Business risks
Performance
Business opportunities
Compliance
External impacts
Response
Policies, targets &
governance
Internal actions
External
engagement
Draft
Most CPG companies voluntarily report on water use
62% of S&P 500 Consumer Staples companies responded to the 2012 CDP Water
questionnaire, with water stress as the number one reported risk:
CDP Water US Response Rates 2012
Types of Reported Risks 2012
Source: Carbon Disclosure Project, CDP US Water Report 2012
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Implications
Current state
Context
Performance
Compliance
Business risks
Business opportunities
External impacts
Response
Policies, targets &
governance
Internal actions
External
engagement
Draft
Finally, companies set priorities and
develop response strategies
Example water initiatives for the CPG industry:
Supplier
engagement
Watershed
management
Raw materials
Sustainable
agriculture
Flood
mitigation
Manufacturing operations
Water
conservation
Parched: The Ripple Effects of Drought on the Value Chain
PwC
Access to
clean water
Policy &
advocacy
Product use
Consumer
outreach
Aquifer
recharge
Treatment
enhancement
July 2013
6
Implications
Current state
Context
Performance
Compliance
Business risks
Business opportunities
External impacts
Response
Policies, targets &
governance
Internal actions
External
engagement
Draft
Many CPG companies find the majority of water risks
and impacts are in the supply chain
Puma’s
Environmental
Profit and Loss
• Water use is 33% of
the company’s total
environmental impact
• Majority of water
impacts are in Tier 4
suppliers
€
€
€
€
€
€
Source: Corporate Reporting Case Study, Puma’s Reporting Highlights Global Business Challenges, PwC, 2011
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Thank you
Lauren Kelley Koopman
PricewaterhouseCoopers
Sustainable Business Solutions
[email protected]
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