Fresno, California: With companies increasingly focused on reducing their carbon footprint, not just as part of their eco-consciousness but also to avoid penalties under new global rules, a new movement is urging corporations to track their "water footprint" as well. Companies ignoring this new risk factor invite financial peril, as freshwater supplies dry up around the globe.
A study by the nonprofit Pacific Institute says major corporations, such as Coca-Cola Co., now routinely disclose the amount of water they use in financial reports. This is done to reassure investors they are tracking risks to their water supply.
The report says this is not the case with a large number of high-tech companies, farms and bottlers which have lost millions because as their lack of foresight in overlooking threats posed by droughts and floods, researchers found in a survey of 121 companies in water-intensive industries. These new threats result from global warming.
With equity markets down in the dumps, investors are taking a close look at water and how it is liable to impact the fortune of companies in which they are stake holders.
Giant California pension fund, CalPERS, for example, expects to lose money on its investments in the State's farming industry, which has registered losses of $260 million in crops last year due to a crippling drought.
Groundwater levels are making municipalities conscious of the amount of water being used by manufacturers and bottlers in the vicinity. In India, both Pepsi Co. and Coca-Cola's bottlers were denied permission to use groundwater in the southern Indian State of Kerala.
Levi Strauss & Co., the reputed brand of jeans, has reduced the amount of water used to make some styles of jeans by 30 per cent over the last year, company officials said. According to company officials, a study conducted by them found that one pair of 501s consumed 918 gallons of water in its lifecycle - from growing the cotton that's used to make the jeans, to the number of times it goes in the washing machine.
The company felt that they needed to impact the environment less and reduce their water footprint.
Water shortages are also liable to affect operations in the high-tech industry, which relies on billions of gallons of pure water for producing silicon chips, the report said.
At the start of the week, scientists with the United Nations body, Intergovernmental Panel on Climate Change, also the recipients of 2007 Nobel Peace Prize, warned climate change will increase the risk of droughts, heat waves and floods if average global temperatures should rise by just 1.8 degrees Fahrenheit.
"Climate change is exacerbating water scarcity problems around the world, yet few businesses are paying attention," said Mindy Luber, the president of Ceres, a Boston-based network of investors and environmental groups that commissioned the report. "What investors need is more information to make the smart decisions they're more than capable of making."