Undisclosed Water Risks

Emily Holbrook


April 1, 2010

Increasingly, water scarcity risks are making headlines and threatening not only company operations, but also the surrounding area used for such operations. The vast majority of companies in water-intensive industries have weak management and disclosure of water-related risks and opportunities, according to a recent report by the investor coalition Ceres, the financial services firm UBS and financial data provider Bloomberg. "Most companies provide basic disclosure on overall water use and water scarcity concerns, but their focus and attention so far is not nearly at the level needed given the enormity of this growing global challenge," said Mindy S. Lubber, president of Ceres. "Our global economy runs on water and in many parts of the world this finite resource is under threat. Companies must do more to disclose their potential exposure from this issue and their strategies for responding." The report ranked the disclosure practices of 100 publicly traded companies, and found that the majority of companies did not adequately report their water risks-80 companies scored fewer than 30 points on a scale of 0 to 100 and the highest-scoring company only earned a 43. Overall, the mining sector scored highest and companies in the homebuilding sector had the lowest scores.
Emily Holbrook is the founder of Red Label Writing, LLC, a writing, editing and content strategy firm catering to insurance and risk management businesses and publications, and a former editor of Risk Management.