CDP Water Disclosure Global Report 2011

8/3/2019 CDP Water Disclosure Global Report 2011

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CDP Water Disclosure Global Report 2011Raising corporate awareness of global water issues

On behalf of 354 investors with assets of US$43 trillion

Carbon Disclosure [email protected]+44 (0) 20 7970 5660

www.cdproject.net

Report written forCarbon Disclosure Project by


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Carbon Disclosure Project 2011

CDP Water Disclosure 2011

354 financial institutions with assets of

US$43 trillion were signatories to CDPWater Disclosure 2011 informationrequest dated February 1, 2011

Aberdeen Asset Managers

ABRAPP - Associao Brasileira das EntidadesFechadas de Previdncia Complementar

Active Earth Investment Management

Acuity Investment Management

Addenda Capital Inc.

Advanced Investment Partners

Advantage Asset Managers (Pty) Ltd

AEGON Magyarorszg Befektetsi Alapkezel

Zrt.Alberta Investment Management Corporation(AIMCo)

Alberta Teachers Retirement Fund

Alcyone Finance

Allianz Global InvestorsKapitalanlagegesellschaft mbH

Allianz Group

AmpegaGerling Investment GmbH

Amundi AM

APG Group

Aprionis

Aquila Capital

ARIA (Australian Reward Investment Alliance)

Arisaig Partners Asia Pte Ltd

ASB Community Trust

ASM Administradora de Recursos S.A.

ASN Bank

Assicurazioni Generali Spa

Australian Central Credit Union incorporatingSavings & Loans Credit Union

Australian Ethical Investment Limited

AustralianSuper

Aviva

Aviva Investors

AXA Group

Baillie Gifford & Co.

Banco do Brasil S/A

Banco Santander

Banesprev Fundo Banespa de SeguridadeSocial

Banesto (Banco Espaol de Crdito S.A.)

Bank of America Merrill Lynch

Bank Sarasin & Cie AG

Bank Vontobel

Bankhaus Schelhammer & SchatteraKapitalanlagegesellschaft m.b.H.

BankInvest

Banque Degroof

Barclays

Basellandschaftliche Kantonalbank

Bayern LB

BayernInvest Kapitalanlagegesellschaft mbH

BBC Pension Trust LtdBBVA

Blumenthal Foundation

BNP Paribas Investment Partners

Boston Common Asset Management, LLC

BP Investment Management Limited

British Columbia Investment Management

Corporation (bcIMC)

BT Investment Management

CAAT Pension Plan

Cadiz Holdings LimitedCaisse de dpt et placement du Qubec

Caisse des Dpts

Caixa Econmica Federal

California Public Employees Retirement System

California State Teachers Retirement System

California State Treasurer

Calvert Asset Management Company, Inc

Canada Pension Plan Investment Board

Canadian Labour Congress Staff Pension Fund

Capital Innovations, LLC

CARE Super Pty Ltd

Catherine Donnelly Foundation

Catholic Super

Cbus Superannuation FundCentral Finance Board of the Methodist Church

Ceres

Christian Super

Christopher Reynolds Foundation

Clean Yield Group, Inc.

Cleantech Invest AG

ClearBridge Advisors

CM-CIC Asset Management

Colonial First State Global Asset Management

Comite syndical national de retraite Btirente

CommInsure

Compton Foundation, Inc.

Concordia Versicherungsgruppe

Connecticut Retirement Plans and Trust Funds

The Co-operative Asset Management

Co-operative Financial Services (CFS)

Corston-Smith Asset Management Sdn. Bhd.

Credit Agricole

Gruppo Credito Valtellinese

Daegu Bank

Daiwa Securities Group Inc.

de Pury Pictet Turrettini & Cie S.A.

DekaBank Deutsche Girozentrale

Deutsche Asset ManagementInvestmentgesellschaft mbH

Deutsche Bank AG

Development Bank of Japan Inc.

Dexia Asset Management

Domini Social Investments LLC

Dongbu Insurance

Earth Capital Partners LLP

Ecclesiastical Investment Management

Ecofi Investissements - Groupe CreditCooperatif

Elan Capital Partners

Element Investment Managers

Environment Agency Active Pension fund

Epworth Investment Management

Essex Investment Management Company, LLC

ESSSuper

Ethos Foundation

Eureko B.V.

Eurizon Capital SGR

Evli Bank Plc

F&C Management Ltd

FAELCE Fundacao Coelce de SeguridadeSocial

Fdris Gestion dActifs

FIDURA Capital Consult GmbH

FIM Asset Management Ltd

First Affirmative Financial Network, LLC

Firstrand LimitedFive Oceans Asset Management Pty Limited

Florida State Board of Administration (SBA)

Folksam

Fondaction CSN

Fondiaria-SAI

Fonds de Rserve pour les Retraites FRR

FRANKFURT-TRUST Investment-GesellschaftmbH

Fukoku Capital Management Inc

FUNCEF - Fundao dos EconomiriosFederais

Fundao AMPLA de Seguridade Social -Brasiletros

Fundao Atlntico de Seguridade Social

Fundao Forluminas de Seguridade Social -FORLUZ

Fundao Vale do Rio Doce de SeguridadeSocial - VALIA

Gartmore Investment Management Ltd

Generali Deutschland Holding AG

Gjensidige Forsikring ASA

GLS Gemeinschaftsbank eG

GOOD GROWTH INSTITUT fr globaleVermgensentwicklung mbH

Governance for Owners

Government Employees Pension Fund (GEPF),Republic of South Africa

Green Century Capital Management

Groupe Investissement Responsable Inc.GROUPE OFI AM

Grupo Banco Popular

Hang Seng Bank

Harrington Investments, Inc

Hauck & Aufhuser Asset Management GmbH

Hazel Capital LLP

HDFC Bank Ltd

Health Super Fund

Henderson Global Investors

Hermes Fund Managers

HESTA Super

Healthcare of Ontario Pension Plan (HOOPP)

HSBC Holdings plc

Ibgeana Society of Assistance and SecuritySIAS / Sociedade Ibgeana de Assistncia eSeguridade (SIAS)

IDBI Bank Ltd

Ilmarinen Mutual Pension Insurance Company

ING

Instituto de Seguridade Social dos Correios eTelgrafos- Postalis

Instituto Infraero de Seguridade Social -INFRAPREV

Instituto Sebrae De Seguridade Social -SEBRAEPREV

Investec Asset Management

Irish Life Investment Managers

JPMorgan Chase & Co.

Jupiter Asset Management

KB Kookmin Bank

KDB Asset Management Co., Ltd.

KEPLER-FONDS Kapitalanlagegesellschaft m.b. H.

KfW Bankengruppe

KlimaINVEST

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KPA Pension

La Banque Postale Asset Management

La Financiere Responsable

Lampe Asset Management GmbHLBBW Asset ManagementInvestmentgesellschaft mbH

Legal & General Investment Management

LGT Capital Management Ltd.

Light Green Advisors, LLC

Living Planet Fund Management Company S.A.

Local Authority Pension Fund Forum

Local Government Super

Local Super

Lombard Odier Darier Hentsch & Cie

London Pensions Fund Authority

Lothian Pension Fund

Macif Gestion

Maple-Brown Abbott LimitedMaryland State Treasurer

McLean Budden

Meeschaert Gestion Prive

Merck Family Fund

Meritas Mutual Funds

MetallRente GmbH

Metrus Instituto de Seguridade Social

Midas International Asset Management

Miller/Howard Investments

Missionary Oblates of Mary Immaculate

Mistra, Foundation for Strategic EnvironmentalResearch

Mitsubishi UFJ Financial Group (MUFG)

Mizuho Financial Group, Inc.Mn Services

Monega Kapitalanlagegesellschaft mbH

Motor Trades Association of AustraliaSuperannuation Fund Pty Ltd

Mutual Insurance Company Pension-Fennia

Nathan Cummings Foundation, The

National Australia Bank

National Pensions Reserve Fund of Ireland

National Union of Public and GeneralEmployees (NUPGE)

Nedbank Limited

Needmor Fund

Nelson Capital Management, LLC

Nest Sammelstiftung

Neuberger Berman

New Mexico State Treasurer

New York State Common Retirement Fund(NYSCRF)

Newton Investment Management Limited

NGS Super

NH-CA Asset Management

Nikko Asset Management Co., Ltd.

Nissay Asset Management Corporation

NORD/LB Kapitalanlagegesellschaft AG

Nordea Investment Management

Norfolk Pension Fund

Norges Bank Investment Management (NBIM)

North Carolina Retirement System

Northern Ireland Local Government OfficersSuperannuation Committee (NILGOSC)

NEI Investments

Oddo & Cie

OECO Capital Lebensversicherung AG

OMERS Administration Corporation

Ontario Teachers Pension Plan

OP Fund Management Company Ltd

Opplysningsvesenets fond (The NorwegianChurch Endowment)

Oregon State TreasurerOrion Asset Management LLC

Parnassus Investments

Pax World Funds

Pensioenfonds Vervoer

Pension Protection Fund

PETROS - The Fundao Petrobras deSeguridade Social

PFA Pension

PGGM

Phillips, Hager & North Investment ManagementLtd.

Pictet Asset Management SA

PKA

Pluris Sustainable Investments SA

Pohjola Asset Management Ltd

Portfolio 21 Investments

PREVI Caixa de Previdncia dos Funcionriosdo Banco do Brasil

Provinzial Rheinland Holding

Prudential Financial US

Psagot Investment House Ltd

PSP Investments

QBE Insurance Group

Rabobank

Railpen Investments

Rathbones / Rathbone Greenbank Investments

Rei Super

Reliance Capital Ltd

RLAM

Robeco

Rockefeller Financial

Rose Foundation for Communities and theEnvironment

Royal Bank of Canada

RREEF Investment GmbH

SAM Group

SAMPENSION KP LIVSFORSIKRING A/S

SAMSUNG FIRE & MARINE INSURANCE

Sanlam

Santa F Portfolios Ltda

SAS Trustee Corporation

Schroders

Scottish Widows Investment PartnershipCRD Analytics

SEB

SEB Asset Management AG

Seligson & Co Fund Management Plc

Sentinel Investments

Seventh Swedish National Pension Fund (AP7)

Shinhan BNP Paribas Investment TrustManagement Co., Ltd

Shinkin Asset Management Co., Ltd

Siemens Kapitalanlagegesellschaft mbH

Signet Capital Management Ltd

Smith Pierce, LLC

SNS Asset Management

Social(k)Solaris Investment Management Limited

Sompo Japan Insurance Inc.

Sopher Investment Management

SPF Beheer bv

Sprucegrove Investment Management Ltd

Standard Life Investments

State Street Corporation

StatewideSuper

StoreBrand ASA

Strathclyde Pension FundSuperfund Asset Management GmbH

SUSI Partners AG

Sustainable Capital

Svenska kyrkan, Church of Sweden

Syntrus Achmea Asset Management

T. SINA KALKINMA BANKASI A..

TD Asset Management Inc. and TDAM USA Inc.

Telluride Association

Terra Forvaltning AS

The Brainerd Foundation

The Bullitt Foundation

The Central Church Fund of Finland

The Co-operators Group Ltd

The Daly Foundation

The GPT Group

The Joseph Rowntree Charitable Trust

The Local Government Pensions Institution

The Pension Plan For Employees of the PublicService Alliance of Canada

The Pinch Group

The Russell Family Foundation

The Shiga Bank, Ltd.

The Standard Bank Group

The United Church of Canada - General Council

The University of Edinburgh Endowment Fund

The Wellcome Trust

Westpac Banking Corporation

Threadneedle Asset Management

Tokio Marine & Nichido Fire Insurance Co., Ltd.

Toronto Atmospheric Fund

Trillium Asset Management Corporation

Triodos Investment Management

Union Asset Management Holding AG

UNISON staff pension scheme

UniSuper

Unitarian Universalist Association

United Methodist Church General Board ofPension and Health Benefits

Universities Superannuation Scheme (USS)

Vancity Group of Companies

Veris Wealth Partners

VicSuper Pty Ltd

Victorian Funds Management Corporation

Vision Super

Waikato Community Trust Inc

Walden Asset Management, a division of BostonTrust & Investment Management Company

WARBURG - HENDERSONKapitalanlagegesellschaft fr Immobilien mbH

WARBURG INVESTKAPITALANLAGEGESELLSCHAFT MBH

West Yorkshire Pension Fund

WestLB Mellon Asset Management (WMAM)

Winslow Management, A Brown AdvisoryInvestment Group

Woori BankYES BANK Limited

York University Pension Fund

Youville Provident Fund Inc.

Zegora Investment Management

Zevin Asset Management

Zurich Cantonal Bank

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CEO ForewordAs this report goes to print, floods are disrupting millions of lives in Thailand and Cambodia, inundating thousandsof local businesses and wiping more than 1.5% off Thailands GDP. Meanwhile Texas is suffering from a drought thathas already lasted 12 months and by August 2011 had cost over $5.2 billion in agricultural losses according to TexasA&M University. Yet the impact of these events goes beyond the local devastation. The Thailand floods have causeddisruption to the global supply of computer and automotive components, while events in Texas have led to foodand agriculture losses and a reduction in export opportunities. These events are a powerful reminder of the strategicimportance that water has for global business.

The advantage of understanding waters importance is certainly tangible for the worlds clothing companies. Manystruggled this year as floods and droughts in the worlds major cotton growing regions coupled with a surge indemand from Asia drove prices on the New York Cotton Exchange from 86 to 230 cents per pound in the year toMarch 2011. By understanding water risk in their supply chain, companies can prepare for it and manage it. That iswhy H&M is participating in global initiatives to educate cotton farmers on better farming practices and why PPRssubsidiary Puma has set water use reduction targets that go beyond its operations to include its suppliers water useas well.

This year has seen a marked increase in the number of the worlds largest companies reporting on their water usage,on the risks that water presents, and on their responses to that risk: of the companies in the Global 500 that weresent the second CDP Water Disclosure information request, 60% responded, up from 50% in 2010. As this report,written by Deloitte, explains, responses from these companies indicate that water is impacting global business now,and yet water is not nearly as high on the corporate agenda as climate change.

The 2030 Water Resources Group predicts that the demand for water will outstrip supply by 40% by 2030 and thatclosing this gap could cost as much as $50 to $60 billion a year for twenty years. As growing demand for water

from industrialisation and population growth is compounded by climate change and growing uncertainty of supply,the global economy will be reoriented towards businesses that take active stewardship of water resources and buildresilience to shortages and floods. The companies that succeed will be those that consider water with the strategicimportance it deserves and take steps to transform their business now.

CDP Water Disclosures goal is to aid that transformation by encouraging meaningful and systematic reporting onwater globally so that investors and other stakeholders can understand how companies are building water into theircore business strategies, and so that leading practices can be shared. The 354 institutional investors which requestedinformation from their portfolio companies through us this year are the vanguard of this transformation. CDP WaterDisclosure is delighted to be working together with these investors, our lead sponsors Deloitte, Molson Coors andNorges Bank Investment Management and our project sponsor Irbaris.

Paul Simpson

CEOCarbon Disclosure Project



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Contents2011 CDP Water Disclosure Signatories 2

Foreword 4

Executive Summary 6

Report Commentary 7

Global 500 Overview 8

Geographic Overview 16

Australia 100 and South Africa 100 Overview 20

Sector snapshots

Consumer Discretionary 26Consumer Staples 28

Energy 30

Health Care 32

Industrials 34

Information Technology 36

Materials 38

Utilities 40

Appendix I: Table of Response Status and Sector by Company 42

Appendix II: Report Methodology 50

Appendix III: Global 500 Companies by Country 51

Appendix IV: Summary of Key Indicators 52


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Executive Summary

Introduction

In 2011 some of the worst droughtsin decades have hit regions inChina, East Africa, the Middle Eastand the United States. Destructiveflooding currently inundates Thailandand earlier this year the prolongeddrought in Queensland, Australia wasalleviated by 1-in-100 year floods.In this changing global environment,it is essential for global businessesto address the importance of wateras a critical resource if the global

economy is to become resilient to thewater-related impacts from which it isalready suffering.

Selected companies from the FTSEGlobal Equity Index Series (Global500) and this year for the firsttime, from the Australian SecuritiesExchange (Australia 100) and theJohannesburg Stock Exchange(South Africa 100) were invited torespond to the second annual CDPWater Disclosure information request

because they operate in sectorswhich are water-intensive or exposedto water-related risks. This year theresponse rate amongst the Global500 increased to 60% from 50% in2010, representing 190 out of 315companies which were sent thequestionnaire. Response rates fromthe Australia 100 (41%, 22 out of 54)and South Africa 100 (46%, 26 out of56) were strong for their first year.

Key findings - Global 500

The majority of respondingcompanies have identified water

as a substantial risk to their

business

59% (113) of respondents reportexposure to water-related risk andover one third of respondents havealready suffered recent water-relatedbusiness impacts, with associatedfinancial costs as high as US$200million. 64% of all risks in directoperations and 66% in the supply

chain are reported to have thepotential to impact business eithernow or within five years.

Almost two thirds of companies

have identified water-related

opportunities and most

opportunities are reported as

near-term

63% (119) of respondents identifyopportunities including costreductions associated with increasedwater efficiency, revenue from new

water-related products or services,and improved brand value. 79%of the opportunities reported areexpected to impact business withinthe next five years.

Water-related issues receive less

attention than climate change at

the board level

57% (109) of Global 500 respondentsreport board-level oversight of water-related policies, strategies or plans.In contrast, 94% (371) of Global 500

respondents to the Investor CDPinformation request report board-leveloversight of climate change1. Whywater-related issues are given lowerpriority than climate change issues isunclear, especially as the majority ofreported risks and opportunities arenear-term.

1 CDP Global 500 Report 2011: Accelerating Low Carbon Growth

Respondents ability to provide

water-related usage data hasimproved

The proportion of respondentsreporting water withdrawals (95%,181) and recycling/reuse data (58%,111) has increased since 2010. Theability to measure and report wateraccounting metrics is essentialfor better management of waterresources and demonstrates anincreased awareness of water issuesamong respondents since 2010.

Energy companies report highlevels of risk and low levels of

board-level oversight

The Energy sector has the lowestresponse rate (47%, 25 respondents)of all sectors and the lowest numberof respondents that report board-level oversight of water-relatedpolicies, strategies or plans (36%,9). A low level of board oversight issurprising since 72% (18) of Energyrespondents report exposure towater-related risk compared to anaverage of 59% (113) across allrespondents.

Australia 100 andSouth Africa 100

Respondents have higher levels of

reported risk than the Global 500

Water issues should be high on theagenda for Australian and SouthAfrican companies given that 50%(11) of respondents in the Australia100 and 58% (15) of respondentsin the South Africa 100 haveexperienced detrimental water-related business impacts in the pastfive years. A lower percentage ofrespondents in both the Australia100 and South Africa 100 reporthaving a water policy, strategy, orplan than in the Global 500, but thenumber of companies reporting wateraccounting data from these countriessuggests that companies are takingsteps to improve their management

of water issues.

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A new paradigm in water management

Water is a strategic resource for most global businesses.

The reasons are straightforward. A growing population and increasing economic activitycoupled with declining water quality in many regions has resulted in increased competitionfor water in the public and private sectors. While the term water scarcity is frequently heard,we are more specifically experiencing greater competition for water. The amount of fresh andaccessible water is static; we do not create new water or use up existing supplies. Insteadwe are placing greater demands on an irreplaceable natural resource.

The response to this increased competition is multifold. Most importantly, the true valueof water is increasingly being recognized. From a business perspective, the value of waterresides in business continuity (having an appropriate quantity and quality of water), licenseto operate, and brand value. This recognition of value translates into growth in the numberof companies mapping risk within watersheds, measuring usage in direct operations and thesupply chain, establishing water-related targets and goals, deploying technologies to increasewater reuse and recycling, engaging with a wide range of stakeholders, and increasingdisclosure of water management efforts.

Water scarcity is fundamentally about understanding water risk and resultant business risk(operational, regulatory, and reputational), but understanding risk is only the beginning of asuccessful water stewardship effort. Stewardship requires engagement with stakeholdersto collaboratively manage water as a shared resource; it is not possible to address thechallenges posed by water scarcity alone. The need to engage with other peers and othersectors, non-governmental organizations (NGOs), communities, and governments to developbroad watershed-level approaches to managing water is essential.

Water scarcity is also driving innovation. We are witnessing the creation of a new paradigmfor water management that includes initiatives such as improved water data acquisition andanalytics, precision agriculture, improved water efficiency, addressing water losses frompipeline leakage, energy efficient water treatment technologies, and a move to extract energyand nutrients from wastewater.

This report reflects these changes in how businesses are managing risk and creatingbusiness opportunities. The CDP Water Disclosure information request is an important effort,along with other global initiatives, in transforming how we manage one of our most essentialnatural resources.

We are proud to be part of CDPs effort to increase awareness of the importance ofaddressing water scarcity and resulting business risks and opportunities. We recognizethe efforts of those companies that responded to the information request, to the investororganizations which are signatories to CDP Water Disclosure, and to our colleagues fromMolson Coors, Norges Bank Investment Management (NBIM), and Irbaris who have shaped asuccessful 2011 CDP Water Disclosure program.

Will Sarni

Director and Practice Leader, Enterprise Water StrategyDeloitte Consulting LLP

Report Commentary

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Global 500 Overview

An increasing number of the

worlds largest companiesare disclosing water-relatedinformation

The response rate to CDP Water

Disclosures second annualquestionnaire increased from 50%in 2010 to 60% in 2011 (Figure 1).315 companies from the Global 500were invited to respond because theyare considered to be in either water-intensive sectors or those sensitiveto water issues in their supplychain. 190 of these companiesresponded, of which 59 were firsttime respondents. The increasein disclosure is matched by an

increasing awareness of water as astrategic business issue.

Using water moreefficiently will enable

us to do business in

areas that may not

be viable for other

businesses and

make us the partner

of choice for local

communities and

governments who

insist on responsible

water use.

Anglo American

Global 500

60%

Consumer Discretionary

48%

Consumer Staples

73%

Energy

47%

Health Care

79%

Industrials

48%

Information Technology

69%

Materials

72%

Utilities

59%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Response rate

Figure 1: Response rate by sector

The majority of respondingcompanies have identifiedwater as a substantial riskto their business

59% (113) of all respondents report

exposure to water-related risk thathas the potential to cause significantbusiness impacts (Figure 5). Theneed for these respondents tomanage water-related risk effectivelyis immediate: risks with the potentialto have an impact now or within fiveyears account for 64% of all risksreported in direct operations and66% in the supply chain (Figure 3).The most commonly reported risksin direct operations (Figure 2) include

increased water stress or scarcity,which is identified by 41% (78) of

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21%

4%

Highercomplience costs

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

Percentageofrespondents

41%

24%

18%

8%

Water scarcity Flooding

23%

6%

Reputationaldamage

Direct operations Supply chain

Figure 2: Types of water-related risk reported in direct operations and

supply chain1

respondents, flooding (24%, 45),

reputational damage (23%, 43), andregulation of discharges leading tohigher compliance costs (21%, 40).Similar trends are seen in thesupply chain.

Water-related risk is especiallyapparent when considering that38% (73) of responding companieshave experienced water-relatedbusiness impacts within the lastfive years.2 As shown in Figure4, a relatively high percentage of

respondents experienced theseimpacts in the Materials (68%, 23),Utilities (53%, 8) and Energy (48%,12) sectors. Disruption to operationsfrom severe weather events (e.g.flooding) and water shortagesare most frequently reported byrespondents. The SouthernCompany reported US$200 millionin costs associated with electricityrequired to compensate for reducedhydroelectricity production duringdrought. According to The SouthernCompany, the company hasstrengthened its resilience to droughtthrough a diverse energy portfolio,storage ponds at key facilities andby working closely with governmentagencies to plan contingencies fordrought conditions. A US$2 millionloss due to production curtailmentfrom seasonal drought was reportedby Kimberly-Clark at one of itsfacilities in Malaysia, where it hasnow installed effluent recycling and

other technologies to ensure moresecure water supplies in the future.

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Percentag

eofrespondents

Percentage

ofreportedrisks

oropportunities

7%

Risk indirect

operations

37%

55%

38%

Risk insupplychain

35%

27%

8%

Opportunities

29%

63%

Exposure

Figure 3: Water-related risk and opportunity: reported exposure and

time frame

Yes

No

Dont know

Risk indirect

operations

14%

21%

64%

Risk insupplychain

19%

15%

66%

Opportunities

10%

11%

79%

Time frame

Near-term (0-5 yrs)

Long-term (>5 yrs)

Unknown

Global 500

9

1 Risks reported are the top four risks identified by companies in both direct operations and the supply chain.2 Some responses to this question were unclear. To calculate the number of companies experiencing detrimental impacts, individual responses were judged

independently of company yes and no answers. See Appendix II for a description of the full report methodology.


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100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Perce

ntageofrespondents

23%

59%

ConsumerDiscretionary

24%29%

Industrials

40%

72%

ConsumerStaples

14%

32%

InformationTechnology

48%

72%

Energy

68%

76%

Materials

23%

45%

Health Care

53%

80%

Utilities

Suf fered water-re lated business impacts in past 5 years Exposed to risks in direct operat ions or supply chain

Figure 4: Reported exposure to water-related business impacts and risks

Awareness of risk in the

supply chain is lower than

awareness of risk in direct

operations

More companies report risk indirect operations (55%, 105) thanin the supply chain (27%, 52) andcompanies ability to identify riskin the supply chain is also lower:38% (72) cannot state whether theirsupply chain is exposed to water-related risk, compared to only 7%(14) for direct operations. 41% (9)

of respondents in the ConsumerDiscretionary sector cannot statewhether their supply chain is exposedto water-related risk, despite the factthat it is dominated by companiesin industries that are particularlyexposed to supply chain risk suchas retailers, hotels and resorts, andautomobile manufacturers.

31% (58) of respondents are able toidentify key water-intensive inputs(such as iron ore, sodium nitrate,sulfur, coal, natural gas, liquefiedpetroleum gas, jet fuel, electricity,corn for ethanol production, and

soy) sourced from regions subjectto water-related risk. Of the 71 key

water-intensive inputs identified byrespondents, 18% are more than50% sourced from these regions.Among sectors, Materials reportsthe largest percentage (56%) of keyinputs that are primarily sourced fromregions at risk.

Relatively few companies aremanaging risks in their supply chaincompared to direct operations. 82%(156) of respondents report taking

action to manage water resourcesin direct operations, while 41% (78)report taking action in supply chainand watershed management. Only26% (50) of companies are activelymonitoring water-related risks intheir supply chain by requiring keysuppliers to report water use, risks,and management plans. Buildingthis level of supplier reportinginto business practice is vital forcompanies that depend on theirsupply chains, since in many casesthe largest proportion of a companyswater use and associated risk canbe in the supply chain. While 60%

(15) of respondents in the ConsumerStaples sector, which includes food,

beverage and tobacco industries,identified water-related risk in theirsupply chain, only 32% (8) of thesecompanies require key suppliersto report water use, risks andmanagement plans.

Those companies that identify risk intheir supply chain can take practicalsteps to mitigate risk, as shown bycertain companies. H&M Hennes &Mauritz is participating in the globalBetter Cotton Initiative to educatecotton farmers on better farmingpractices and thus promote resilienceto drought in their supply chain.PPRs subsidiary Puma has setwater use reduction targets that gobeyond its operations to include itssuppliers water use as well.

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Global 500

4% 23%

32%

41%

Exposed to risk in direct operations only

Exposed to risk in both direct operationsand supply chain

Exposed to risk in supply chain only

No risk reported or uncertain

Figure 5: Reported exposure to water-related risk in direct operations

and supply chain

Almost two thirds ofcompanies have identifiedwater-related opportunities,and most opportunities arenear-term

Opportunities with the potentialto generate a substantial changein revenue or business operationare reported by 63% (119) ofrespondents. Companies frequentlyreport cost savings from increasedwater efficiency or from reductionsof other inputs tied to water (e.g.

energy, agricultural products). Manyrespondents report the potential todevelop water-related products orservices, and either avoid reputationalrisk or build brand value. 79% ofopportunities are characterized asnear-term (now or within five years),suggesting that water-related issueshave immediate potential for creatingvalue.

Colgate Palmolive reports animproved cleaning process at a

manufacturing site in South Africathat saves 388,000 liters of waterannually and allows the facility to

produce an additional two tonsof product daily given reduced

downtime. Cisco Systems workedwith three of its printed circuit boardassembly partners to implement anew soldering practice that renderedthe water-intensive wash stage of themanufacturing process unnecessary.By 2010, this new practice hadbeen implemented company-wide,saving Cisco Systemsover US$1million each year with no adverseimpact on product quality. Procter& Gamble re-launched a product

this year that has helped strengthenbrand presence. The PUR packet is asmall packet that helps turn 10 litersof dirty water into clean, drinkingwater. Procter & Gambles non-profitbusiness model for the PUR packethas helped produce more than threebillion liters of clean drinking waterthrough global relief organizationsincluding AmeriCares, CARE,International Federation of RedCross and Red Crescent Societies,Population Services International, and

World Vision.

Water is fast

becoming one ofthe planets most

stressed resources.

Access to clean water

has emerged as a

critical issue affecting

economic activity,

development, and

business around theworld.

IBM

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Water-related issues

receive less attentionthan climate change at

the board level

57% (109) of Global 500 respondentsreport board-level oversight of water-related policies, strategies or plans.In contrast, 94% (371) of Global 500respondents to the Investor CDPinformation request report board-leveloversight of climate change. Whywater-related issues are given lower

priority than climate change issuesis unclear, especially as the majorityof reported risks and opportunitiesare near-term. Despite the factthat a large number of companiesreport a policy, strategy or plan(93%, 176), water is often managedunder general environmental orsustainability plans rather than underspecific plans focused on water.

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Perce

ntageofrespondents

2010

2011

Figure 6: Water management and governance

89%93%

Reporta policy,

strategy orplan

42%

58%

Able toreport water

recycling/reuse

67%

57%

Board-leveloversightof policy,

strategy orplan

60%57%

Reportconcretetargets or

goals

72% 72%

Able to identifylinkages ortrade-offsbetween

water andcarbon

88%

94%

Reportactions tomanage

resourcesor engage

stakeholders

22%

26%

Required keysuppliersto report

water use,risks and

management

86%

95%

Able toreport waterwithdrawals

12


Measuring quantitative performance

in addressing water related risksis integral to an effective waterstewardship program and canindicate a more mature watergovernance structure. 81% (154) ofrespondents report having water-related targets and goals but only57% (109) have set concrete,quantitative goals (compared to60% in 2010).3 Generally,quantitative targets/goals arefocused on absolute reductionsand water efficiency.

The percentage of respondentswith board-level oversight ofwater-related plans has a strongcorrelation to the reporting maturityof respondents. 41% (24 of 59) offirst time respondents have board-level oversight of water-relatedplans, compared to 65% (85 of 131)of previous respondents. Although

first time respondents are not

necessarily new to addressingwater risk, their responses can beperceived as less mature than thoseof previous respondents. First timerespondents are also less able toidentify operations in water-stressedregions, identify water-intensiveinputs from these regions, andassess whether direct operationsare at risk (Table 1). By providing aplatform for peer comparison anda data set for long-term evaluation,disclosure is an important step

for first time respondents and canhelp build awareness of watermanagement internally.

3 To calculate the number of concrete targets and goals, individual responses were judged to exclude those with mention of qualitative goals or those withoutspecific targets. See Appendix II for a description of the full report methodology.


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This years CDP Water Disclosure findings show nearly60% of companies have water risk to their operationsand most view it as a current or near-term risk. Wateris a very real business and societal issue one thatchallenges us globally but must be solved locally. With aglobal network of local breweries, our experience is in linewith these findings. It is why water is a top priority in ourcorporate responsibility agenda.

Molson Coors has always believed that companies play a

critical role in working with local water interests to ensurea sustainable watershed. Part of that responsibility is notonly to provide transparent reporting ourselves but alsopromote disclosure by all water users. Transparency isone of six elements making up our global water strategy,a strategy managed by a cross-functional steeringcommittee with oversight from executive leadership andour board of directors.

Transparent reporting has instilled in our company adiscipline that benefits not only shareholders, but also ourlocal communities. Our reporting commitments requirethat we have conversations around local water challengesthat previously might not have been discussed. Thiscandor and heightened awareness has extended tostakeholder forums in brewery watersheds across ourmarkets. We are working to involve our supply chainthrough grower outreach in the UK and the US.

Without great water, we cant make great beer. And,water matters to the people who matter to us ourcustomers, consumers and communities. We lookforward to continuing to work with CDP Water Disclosureand its reporting companies. It is only through sharingour challenges and best practices that companies canmove towards a more secure water future.

Global 500

Questionnaire Responses First Time Respondents Previous Respondents

Board-level oversight of water policy, strategy, or plan 41% 65%

Able to identify operations in water-stressed regions 78% 94%

Ability to identify key water-intensive inputs fromregions with water-related risk

25% 33%

Exposed to risks in direct operationsYes 58% 54%No 31% 40%

Don't Know 12% 5%

13

As a lead sponsor of CDP Water Disclosure, NBIM ispleased with the notable increase in companies thatresponded to this years water disclosure questionnaire.The answers suggest that companies are placing moreweight on water issues, which are both a risk and anopportunity for most of these businesses.

The results also suggest that company boards need tostrengthen oversight of water issues. Another concern isthe low awareness of water-related risks in their supplychains. In some sectors, risks are greater in the supply

chain than in a companys direct operations.

As a long-term investor in about 8,000 companiesworldwide, NBIM takes water management seriously. Weexpect companies to consider and report on the risks ofincreasingly scarce water supplies and water pollution.Failure to manage these risks may hurt their profits and,consequently, our investments.

The CDP Water Disclosure questionnaire provides criticalinformation for managing water-related risks in ourportfolio. We commend CDP Water Disclosure on its workand will continue to support this important initiative.

Norges Bank Investment Management (NBIM) commentary

Anne Kvam, Global Head of Ownership and manager of the Government Pension Fund Global

Molson Coors Brewing Company commentaryPeter Swinburn, President & CEO

Table 1: Trends among first time respondents


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100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Responserate

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Industrials


Consumerdiscretionary

Health Care

Consumerstaples

Energy

Materials

Utilities

Percentage of respondents exposed to risk

Figure 7: Reported exposure to water-related risk and response rate

by sector

14


Respondents ability to

provide water-related usagedata has improved

The proportion of companies ableto report water withdrawals (95%,181) has increased since 2010 (86%,129), as has the ability to report waterrecycling/reuse data (58% or 111compared to 42% or 63 in 2010).The ability to measure and reportwater data is essential for bettermanagement of water resources anddemonstrates an increased awareness

of water issues among respondentssince 2010. 56% (106) of respondentsverify the majority of water withdrawaldata, while 34% (64) verify the majorityof recycling/reuse data, suggesting adesire to rely on data accuracy in watermanagement decisions and reporting.More companies also report action tomanage water resources or engagestakeholders on water issues this year(94%, 179) compared to 2010(88%, 132).

Energy companies reporthigh levels of risk andlow levels of board-leveloversight

The Energy sector has the lowestresponse rate (47%, 25 respondents)of all sectors and the lowest numberof respondents that report board-level oversight of water-relatedpolicies, strategies or plans (36%, 9).Energy is also the only sector to have

respondents report that no one hasresponsibility for water policies (8%,2). A low level of board oversight issurprising since 72% (18) of Energyrespondents report exposure to water-related risk compared to an averageof 59% (113) across all respondents.Detrimental water-related impacts havealso affected a greater proportion ofrespondents in this sector (48%, 12)compared to the Global 500 (38%, 73).

The Consumer Staples and Materialssectors also report high levels of risk,but these sectors have high responserates to the CDP Water Disclosure

information request (Figure 7) and havea higher percentage of respondentswith board-level oversight of waterpolicies, strategies or plans. Reportedboard level oversight in the Materialssector is the highest among all sectors(76%, 26).

The Health Care sector, despitereporting lower levels of risk exposure

than the Global 500, has the highestresponse rate of all sectors (79%, 23).

The Materials, Utilities and Energysectors report highest exposure tonear-term risks in direct operationswhile the Consumer Staples,Consumer Discretionary and Materialssectors report the highest exposure inthe supply chain (Figure 8).

The relationship betweenwater and carbon is widelyunderstood

72% (137) of companies in the Global500 are able to identify linkages ortrade-offs between water use andcarbon emissions. These companiesunderstand that water conservation

typically saves energy and carbonemissions given that electricity isrequired for treating, heating/cooling,and transporting water. WoolworthsLimited, for example, invested inrefrigeration and air conditioningsystems at two distribution centers thatutilize rainwater harvesting, saving bothenergy and water (16.4 million liters)in 2010.

Many respondents also acknowledgethe trade-offs between water use and

carbon emissions. Some projects tomitigate water scarcity may result inhigher energy use while some energy


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Global 500

15

80%

70%

60%

50%

40%

30%

20%

10%

0%Exposedtonear-ter

m

riskinthesupplychain

0% 10% 20% 30% 40% 50% 60% 70% 80%

Industrials


ConsumerDiscretionary

Health Care

ConsumerStaples

Energy

Materials

Utilities

Exposed to near term risks in direct operations

Figure 8: Reported exposure to near-term risk in direct operations and

supply chain by sector

efficiency projects may result in higher

water use (e.g. desalination providesadditional water supply, but is alsoenergy-intensive). Nestl, for example,is aware of the increased waterrequirements of biofuels made fromcrops such as maize and wheat andtherefore advocates against the use ofthese crops for fuel.

Leading practice strategies used byrespondents to manage the linkagesand trade-offs between water andenergy include:

Systems to track and reduce theenvironmental impacts and costs ofnew programs and products acrossthe entire lifecycle,

Evaluating the interdependence ofvarious inputs and the opportunitiesfor savings in multiple areas,

Developing policies and programswhich govern products andoperations,

Climate protection measures tocounter water scarcity problems,and

Engaging with key stakeholders(e.g. NGOs, suppliers, employees,and customers) to promote waterand energy conservation andimprove efficiency.

Johnson Controls has developeda combined heat and power plant inBaltimore, Maryland (US) that uses theremainders of treated wastewater asfuel and results in many benefits forthe company and the local community.The plant will generate 2.4 megawattsof electricity annually, provide steam tooffset process heating requirements,and produce hot water for boilers. Thedigester gas cogeneration facility at thesite will also reduce emissions and thecitys energy bill by US$1.4 million eachyear while increasing energy security asgas is piped directly to its end use andprovides a hedge against fluctuations

in fuel and electricity prices.

Irbaris LLP commentaryDavid Hampton, Managing Partner

Having been involved with CDP Water Disclosure since its inception, weare pleased to see this years higher response rate which demonstrates theincreasing recognition of water as an issue, as well as the importance ofdisclosure. The responses, however, show there is still much to be done torespond to the challenges and opportunities related to water.

The complex and location-specific nature of water issues for business canbe an obstacle to addressing associated risks. Good risk assessment toolshave been developed and much good work is being done to measure and

communicate water risks. However, too many companies are caught up inthe measurement process for their own sites rather than taking proactivesteps to understand their exposure across their broader business system.

The lack of board-level engagement on water issues in many companies isalso telling. Given the potential for water to have a critical impact on multipleaspects of a business, water needs to be managed at a strategic, corporatelevel. The recently published Ceres Aqua Gauge provides a tool to helpinvestors assess, and companies develop, best practice in managing waterrisk across a business.

CDP has done an excellent job of catalysing awareness of the businessimportance of water issues with major companies and with investors andwe wish CDP continuing success. Our hope is that the next few years ofdisclosure will see a rise in the number of companies taking proactive steps tomanage the issues, rather than simply measuring the problem.


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North AmericaResponse rateTotal responses 83/130

Report a policy, strategy, or plan 88%

Report exposure to risk 55%

Identify opportunity 63%

Figure 9: Key metrics by geographical region 1 2

64%

AfricaResponse rateTotal responses 4/6

67%Latin AmericaResponse rateTotal responses 6/11

55%

Geographic Overview

Water disclosure is

expanding globally, withEuropean companiesshowing the highestresponse rates

Companies from a greater number

of countries reported in 2011, withresponses received from 29 of 35countries, compared to 25 of 34countries in 2010. Based on thelocation of company headquarters,regions with the most respondentsinclude North America (83),

Europe (61), and East Asia (27)

(Figure 9). The countries with themost respondents are the UnitedStates (73), Japan (17), the UnitedKingdom (15), and France (13)(Table 2).

16


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EuropeResponse rateTotal responses 61/85




72%

South & West AsiaResponse rate

Total responses 3/1225%

Southeast Asia & OceaniaResponse rateTotal responses 6/11

55%

East AsiaResponse rateTotal responses 27/60




45%

Geographic Overview

17

1 Regions include North America (Canada, USA), Latin America (Bermuda, Brazil, Chile, Colombia, Mexico, Peru), Europe (Belgium, Czech Republic,Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom), Africa(South Africa, Zimbabwe), East Asia (Greater China, Japan, Russia, South Korea), South and West Asia (India, Israel), and Southeast Asia and Oceania(Australia, Indonesia, Malaysia, Singapore, Thailand).

2 Key metrics are excluded for regions with fewer than 10 respondents, except for number of responses and response rate.


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Europe has the highest regional

response rate (72%, 61 of 85), andGermany is the only country withmore than 10 companies where allinvited companies responded. Amore stringent regulatory landscapein Europe may contribute to agreater degree of engagementon water.

The response rates from India (20%,2 of 10) and Greater China (29%,5 of 17) are low, suggesting thatcompanies from these emerging

economies are generally lessengaged despite significant regionalwater-related issues.3

European companies have

the highest response ratesand awareness of risks andopportunities. 98% (60) of Europeanrespondents have a water policy,strategy, or plan in place, and 93%(57) are able to identify operationsin water-stressed regions, whichindicates a greater businessawareness of water-related issuesthan other regions. European (66%,40) and North American (63%, 52)respondents are also more likelyto identify opportunities than East

Asian respondents (44%, 12).

On a country level, respondents from

the United Kingdom and Germanyreport high levels of exposure towater-related risks in their directoperations or supply chain (73%,11, in the United Kingdom; 75%,6, in Germany), and the samepercentage of respondents alsoidentify water-related opportunities.They are correspondingly highlyengaged, with 100% (15) ofUnited Kingdom respondents and88% (7) of Germany respondentsreporting a water policy, strategy,

or management plan, and 60% (9)and 63% (5), respectively, reportingconcrete, quantitative targetsor goals.

Responses

North America EuropeEast

Asia

Cana

da

Un

ite

d

States

France

Germany

4

Un

ite

d

King

dom

Japan

Public and non-public responses 10 73 13 11 15 17

Response rate 71% 63% 76% 100% 75% 61%

Water policy, strategy or plan in place 80% 89% 100% 88% 100% 88%

Concrete targets or goals in place 20% 60% 54% 63% 60% 47%

Able to identify operations in water-stressed regions 100% 85% 85% 100% 100% 82%

Exposed to risks in direct operations 80% 45% 62% 75% 73% 35%

Exposed to risks in supply chain 20% 21% 31% 50% 40% 18%

Exposed to risks in direct operations or supply chain 80% 52% 62% 75% 73% 35%

Identifying opportunity 70% 62% 54% 75% 73% 41%

Table 2: Response summary for countries with 10 or more respondents

3 Greater China includes China, Hong Kong, and Taiwan.4 To preserve anonymity, three non-public responses from Germany are excluded from percentages, except for number of responses and response rate


18


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North America

EMC: identifying water-related

opportunities.In its owned and operated facilities,EMC looks at energy, water andcarbon emissions holistically. Bydriving efficiencies in its productsand in its data center operations,EMC aims to reduce both electricity

and water. Application of free aircooling technology in EMCs datacenters and labs has allowedthe company to reduce bothpower and water consumption.EMC has a plan to conduct acorporate water footprint analysisto understand quantitatively thelinkages and trade-offs betweenwater and carbon emissions, andto pursue strategies to minimize thecompanys overall impact on theenvironment.

Europe

Danone: building water

management into site selection

and operation.

At Danone, choosing a newproduction site is subject to anassessment of the sustainabilityof water resources. Danonesassessment includes examinationof water availability for quantitative/qualitative aspects; tap wateraccess in quantity and quality;governmental programs forprovision and development ofsanitation; the local regulatoryframework; the extent of waterstress; and community and publicrelations issues related to wateraccess. Continuous monitoring andfree drinking water access for localsare part of continuous site operationpolicies. Other Danone divisionshave begun mapping local water

stress, a process that should becompleted by 2012.

East Asia

Sony: groundwater recharge.

Since 2003, Sony SemiconductorKyushu Corporation KumamotoTechnology Center (KumamotoTEC) has been working with thelocal community, environmentalNGOs, farmers, and agriculturalcooperatives to improve

groundwater recharge, wherewater penetrates into the soil andultimately returns to the aquifer. Infiscal year 2010, Kumamoto TECrecharged more than 2.04 millioncubic meters of water, which ismore than its annual consumptionof water.

Southeast Asia & Oceania

Woolworths Limited and

rainwater harvesting.

Woolworths Limited implementedrainwater harvesting at twodistribution centers that use waterbased cooling towers, saving 16.4million liters of water in 2010.Suitability of cooling systems isassessed and designed to meetclimatic regions where they willbe most effective. Extensive workand investment has occurred inrefrigeration and air conditioning,maximizing energy efficiency andlow carbon technology and reducingany carbon cost of not using water-based systems. These investmentshave reduced carbon emissions by500,000 metric tons in addition towater savings.

Latin America

VALE: water efficiency and

recycling/reuse.VALE has intensified its efforts toincrease process efficiency and toreuse water. As a result, in 2010,

the water reuse and recirculationrate throughout VALE s operations

was approximately 79% of the watervolume used in the processes.In 2010, VALE carried out waterefficiency surveys in five areas whichrepresent approximately 40% ofthe total water withdrawal volumein Brazil, and these studies will beextended to other units in 2011.The studies have identified processimprovement opportunities to

increase water efficiency.

Africa

Anglo Platinum: reducing water

withdrawals and engaging

communities.Anglo Platinums water strategyaims to have zero-potable wateruse in their process operations(excluding domestic use demand).Through various initiatives includingsite process water recycling and

recycling of sewage water fromnearby communities, the companyspotable water usage decreasedby 12% in 2010 from 2008 levels.Anglo Platinum has also investedin upgrading municipal wastewatertreatment facilities and supplyingdrinking water to certain schoolsand neighboring communities.

South & West Asia

ITC: protecting soil moisture in

India.ITC participates in a soil andmoisture conservation programby investing in water harvestingsystems, efficient irrigationpractices, agricultural scienceresearch, and by strengtheninginstitutional structures and localwatershed management groups.The program provides soil and soilmoisture conservation to nearly65,000 hectares in some of Indias

moisture-stressed areas.

Geographic Overview

19

Water management across geographical regions


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Australia 100 andSouth Africa 100 Overview

Water management in

AustraliaWater is one of the most vulnerableresources in Australia. Over-allocationof water resources has beencompounded by unpredictabilityin rainfall and a population growthof 1.7% per year.1 In some rivercatchments, increasing urban andrural water demand has alreadyexceeded sustainable levelsof supply.

The country is particularly susceptibleto climate change and long-termdrought. Based on annual renewablewater supply per person (1995) at thewatershed level, significant portionsof Australia are already experiencingextreme water scarcity, a situation

41%Australia 100 Response rate: (22/54)Sectors within Australia 100:

Consumer Discretionary: 1 of 7; Consumer Staples: 3 of 5; Energy:

2 of 8; Financials: 3 of 5; Health Care: 1 of 1; Industrials: 0 of 4;

Information Technology: 0 of 1; Materials: 12 of 19; Utilities: 0 of 4

Responding industries:

Beverages: 1 of 2; Biotechnology: 1 of 1; Chemicals: 1 of 2;

Construction Materials: 2 of 2; Containers & Packaging: 1 of 1;

Energy Equipment & Services: 1 of 1; Food & Staples Retailing:

2 of 2; Insurance: 1 of 1; Metals & Mining: 8 of 14; Oil, Gas &

Consumable Fuels: 1 of 7; Real Estate Investment Trusts (REITs):

2 of 3; Textiles, Apparel & Luxury Goods: 1 of 1

in which disruptive water shortages

can frequently occur.

2

Based onprojections for 2025, this level ofextreme water scarcity is expectedto intensify.

In response to the challenges ofclimate change and water availability,the Australian government developedWater for the Future, a long-terminitiative built on four key priorities:taking action on climate change,using water wisely, securing watersupplies, and supporting healthy

rivers.3

Strategic programs toaddress these priorities includeimproved water managementarrangements, and a renewedcommitment to deliver a range ofwater policy reforms in both ruraland urban areas.

1 Intergovernmental Panel on Climate Change (IPCC), IPCC Technical Paper VI: Climate Change and Water. June 2008.(http://www.ipcc.ch/pdf/technical-papers/climate-change-water-en.pdf)

2 World Business Council for Sustainable Development, Global Water Tool 2011. Version 2011.01.

(http://www.wbcsd.org/templates/TemplateWBCSD5/layout.asp?type=p&MenuId=MTc1Mg&doOpen=1&ClickMenu=LeftMenu)3 Australian Government, Department of Sustainability, Environment, Water, Population, and Communities, Water for the Future. October 18, 2011.(http://www.environment.gov.au/water/australia/index.html)

4 Food and Agriculture Organization (FAO) of the United Nations, Aquastat: Global Information System on Water and Agriculture. 2011.(http://www.fao.org/nr/water/aquastat/main/index.stm)

20

Water is a critical

component of the fibrecement manufacturing

process and all of our

plants recognize the

importance of water

conservation.

James Hardie

Industries


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46%South Africa 100 Response rate: (26/56)Sectors within South Africa 100:

Consumer Discretionary: 1 of 9; Consumer Staples: 6 of 13; Energy:

1 of 1; Health Care: 3 of 5; Industrials: 4 of 8; Materials: 11 of 20

Responding industries:

Beverages: 1 of 2; Chemicals: 1 of 1; Construction & Engineering:

1 of 3; Electrical Equipment: 1 of 1; Food & Staples Retailing: 3 of

6; Food Products: 1 of 3; Health Care Providers & Services: 2 of 3;Machinery: 1 of 1; Metals & Mining: 9 of 15; Oil, Gas & Consumable

Fuels: 1 of 1; Paper & Forest Products: 1 of 2; Pharmaceuticals:

1 of 2; Textiles, Apparel & Luxury Goods: 1 of 2; Tobacco: 1 of 1;

Trading Companies & Distributors: 1 of 2

Tongaat Hulett

is committedto a philosophy

of sustainable

development and

thus considers the

management of the

quantity, quality

and reliability of

waters resourcesas mandatory to

achieve optimum,

long-standing,

environmentally

sustainable, social and

economic advantage

for society.

Tongaat Hulett

21

Australia 100 &South Africa 100 Overview

Water management in

South AfricaSouth Africas available freshwaterresources are almost fully utilized andas a result, under stress. At currentpopulation growth and economicdevelopment projections, it is unlikelythat the growth in demand forwater resources will be sustainable.Water supply has the potential tobecome a major restriction to thefuture economic development of thecountry, in terms of both the amount

and quality of water available.Provisional estimates are that SouthAfrica will run out of surplus usablewater by 2025 or soon thereafter.4

Globally, South Africa is rankedamong the 20 most water scarcecountries in the world.5 The countryreceives average annual precipitation

of 495 millimeters per year,

compared to the global average of860 millimeters per year.6,7 Basedon annual renewable water supplyper person (1995) at the watershedlevel, most of South Africa is alreadyexperiencing water stress, and someareas are experiencing extreme waterscarcity; these levels are expectedto intensify based on projectionsfor 2025.8

South Africas approach toaddressing water issues is one

of integrated water resourcemanagement. A key principle of thisapproach is the need to balanceprotection of water resources withsocial and economic development,and the countrys only guaranteedentitlements to water are forecological preservation and to meetbasic human needs.9

5 Department of Environmental Affairs, Republic of South Africa, Environmental Sustainability Indicators: Technical Report 2009.(http://soer.deat.gov.za/State_of_the_Environment.html)


7 Department of Environmental Affairs, Republic of South Africa, Environmental Sustainability Indicators: Technical Report 2009.

(http://soer.deat.gov.za/State_of_the_Environment.html)8 World Business Council for Sustainable Development, Global Water Tool 2011. Version 2011.01.(http://www.wbcsd.org/templates/TemplateWBCSD5/layout.asp?type=p&MenuId=MTc1Mg&doOpen=1&ClickMenu=LeftMenu)



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The Australia 100 and

South Africa 100 have lowerresponse rates and higherlevels of reported risk thanthe Global 500

Despite the acuteness of waterstress in Australia and South Africa,companies listed in the two countrieshave lower response rates than theGlobal 500. 54 of the largest 100companies listed in the AustralianSecurities Exchange (ASX) and 56 ofthe largest 100 companies listed inthe Johannesburg Stock Exchange(JSE) were invited to respond to theCDP Water Disclosure informationrequest because they wereconsidered to be in water-intensivesectors or sectors that are sensitiveto water issues in the supply chain.Of the invited companies, 41% (22)responded from the Australia 100and 46% (26) responded from theSouth Africa 100. This was the first

year that the CDP Water Disclosure

information request was sent tocompanies listed on the ASX andJSE indices, which meant that manycompanies responded to the CDPWater Disclosure questionnaire forthe first time: 17 of 22 respondentsin the Australia 100 and 15 of 26respondents in the South Africa 100were first time respondents in 2011.

Water issues should be high on theagenda for Australian and SouthAfrican companies given that 50% of

respondents (11) in the Australia 100and 58% of respondents (15) in theSouth Africa 100 have experienceddetrimental water-related businessimpacts in the past five years,compared to 38% (73) in the Global500. Business impacts reported bycompanies in the Australia 100 arecaused by flooding (property damageand reduced production) and waterscarcity due to drought (limitedraw material inputs and reduced

production). Business impacts

reported by the South Africa 100 arecaused by flooding, water scarcity,declining water quality, increasedwater prices, and non-compliancewith discharge limits.

More respondents in the Australia100 and South Africa 100 identifyexposure to risks in both directoperations and the supply chain thanthe Global 500, as shown in Figure10. Respondents from the SouthAfrica 100 report high exposure to

risks in direct operations (85%, 22),compared to 59% (13) in the Australia100 and 55% (105) in the Global 500.Water scarcity is clearly a major driverof risk for these companies: 36%of respondents (8) in the Australia100 and 46% of respondents (12)in the South Africa 100 indicate thatthe majority (greater than 50%) ofoperations are located in regions atrisk, compared to only 11% (21) in theGlobal 500.

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%


9%

Australlia100

32%

59%

32%

Australia100

32%

36%

14%

Australia100

27%

59%

8%

South Africa100

8%

85%

38%

South Africa100

23%

38%

15%

South Africa100

8%

77%

7%

Global500

37%

55%

38%

Global500

35%

27%

8%

Global500

29%

63%

Risk in direct operations Risk in supply chain Opportunities

Yes No Dont know

Figure 10: Ability to identify water-related risk and opportunity


22


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17%14%

42%

DirectOperations

4% 5%

15%

SupplyChain

Declining water quality

23%27%

31%

DirectOperations

6%9% 8%

SupplyChain

Reputational damage


Types of risk reported amongrespondents in direct operations andthe supply chain include increasedwater stress or scarcity, flooding,declining water quality, higher waterprices, and reputational damage(Figure 11). In addition, a largepercentage of risks reported in directoperations are near-term (75% inthe Australia 100 and 67% in theSouth Africa 100 compared to 64%

in the Global 500), highlighting theimmediacy of water as an issue inthese regions.

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Percen

tageofrespondents

41%

36%

85%

DirectOperations

18%

23%

35%

SupplyChain

Water stress or scarcity

17%

23%

42%

DirectOperations

4%5%

4%

SupplyChain

Higher water prices

24%

32%

38%

DirectOperations

8%

18%

8%

SupplyChain

Flooding

Global 500 Australia 100 South Africa 100

Figure 11: Types of water-related risk reported in direct operations and supply chain

The majority of respondents inthe Australia 100 (59%, 13) andSouth Africa 100 (77%, 20) identifybusiness opportunity from waterissues (compared to 63%, 119, in theGlobal 500), and these opportunitiesare often reported to have near-term business impacts. The mostfrequently reported opportunitiesinclude efficiency gains andimprovements in brand value.

23


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GPT Group: investing in water efficiency

Since 2005, GPT Group has saved 3.9 million kilolitres of water by taking action such as working with tenantsto reduce their water use, installing water efficient appliances, using recycled water, harvesting rainwater,implementing black-water recycling plants, and planting to suit the local environment. GPT Group saved 1.1

million kilolitres in 2010, which not only provided environmental benefit but also resulted in avoided costs ofUS$3.8 million.

Many companies are

moving toward betteraddressing water-relatedissues

Fewer companies in both the Australia100 (86%, 19) and South Africa 100(69%, 18) report having a water policy,strategy, or plan than the Global 500(93%, 176) (Figure 12). Areas of focuswithin these plans include measuringand reporting water use, minimizingwater use and wastewater discharge,increasing water recycling/reuse, andprotecting biodiversity. Only 42% ofrespondents (11) in the South Africa100 and 50% of respondents (11)in the Australia 100 set concrete,quantitative goals, compared to 57%(109) in the Global 500.

Most respondents in the Australia100 (82%, 18) and South Africa 100(85%, 22) are reporting actions tomanage water resources in theirdirect operations. However, fewer

companies are managing waterissues in their supply chains, withonly 32% of respondents (7) in theAustralia 100 and 42% of respondents(11) in the South Africa 100 takingaction in supply chain and watershedmanagement. Whereas 26% ofrespondents (50) in the Global 500


report that they require key suppliers

to report water use, risks, andmanagement plans, only 14% ofrespondents (3) in the Australia 100and 19% (5) in the South Africa 100require this information fromtheir suppliers.

The ability to report waterwithdrawals and water recycling/reuse data is similar in both regionsto the Global 500, although morerespondents in the South Africa100 and fewer respondents in the

Australia 100 have had the majorityof this data verified comparedto the Global 500. The abilityof respondents to report wateraccounting data at the same levelas companies in the Global 500suggests that Australian and SouthAfrican companies are taking somesteps to address water-related risks.

Awareness of therelationship between waterand carbon is less than

among companies in theGlobal 500

Respondents in the Australia 100and South Africa 100 report lessawareness of the interconnectionsbetween water use and carbonemissions: 55% of respondents (12)in the Australia 100 and 65% ofrespondents (17) in the South Africa100 are able to identify linkagesor trade-offs between water and

carbon, compared to 72% (137) inthe Global 500.

Our activities are often

located in remote,arid environments,

with limited access to

high-quality water. In

recognition that water

is a critical input

for our mining,

smelting, refining and

petroleum businesses,we continue to identify

opportunities for water

reuse or recycling,

efficient use and

responsible waste

water disposal.

Working with our

communities isimportant to better

understanding and

addressing common

water needs.

BHP Billiton

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Woolworths Holdings Limited: working with suppliers and collaboration with NGOs

As part of their water strategy, Woolworths Holdings Limited has committed to reducing relative waterconsumption by 30% by 2012, working with suppliers to reduce water use and improve wastewatermanagement, and researching and understanding the water footprint of selected priority products. Woolworths isthe first retailer to have joined the World Wide Fund for Natures (WWF) Water Neutral Scheme, and has enteredinto a 20-year commitment to become water neutral by eliminating invasive water-thirsty alien plants on supplier

farms and in protected areas, such as the Tankwa Karoo National Park.

14%

55%

50%

91%

95%

50%55%

86%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%


93%

69%

94%92%

58%62%

26%

19%

57%58%

57%

42%

95%

92%

72%

65%

Report a pol icy,strategy, or

plan

Reportconcrete

targets or goals

Board-leveloversight of

policy, strategyor plan

Report actionsto manage

waterresources or

engagestakeholders

Able to reportwater

withdrawals

Able to reportwater recycling/

reuse

Able to identifylinkages ortrade-offs

between waterand carbon

Require keysuppliers to

reportwater use,risks, and

management

Global 500 Australia 100 South Africa 100

Figure 12: Water management and governance


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Consumer Discretionary

Key findings

1. Reported exposure to supply chain risk is

greater in the Consumer Discretionary sector

than in other sectors; however, levels of

engagement to address this risk are also

greater.

2. While the sector has the lowest percentage of

respondents that identify opportunities, the

opportunity to improve brand value through

proactive water stewardship is often reported.

Leading practices A high percentage of respondents have set water-

related targets and goals (82%), while 73% have setconcrete, quantitative targets/goals. This compares to81% and 57% in the Global 500.

The sector is active in engaging stakeholders. 36%of respondents report engaging local communitieson water-related issues; these interactions are oftenfocused on supporting access to drinking water andsanitation facilities in areas lacking these resources.

41% of respondents request water-related information

from suppliers, compared to only 26% on averageamong the Global 500.

We are engaging our suppliers and working with NGOs

such as the NRDC [Responsible Sourcing Initiative] to

help improve environmental practices in fabric mills; from

developing environmental management systems to using

less energy and water, reducing chemical usage and

identifying potential opportunities for increased water

conservation and recycling.

Gap

48%Response rate: (22/46)

Industries within sector:

Auto Components: 2 of 5; Automobiles: 6

of 11; Hotels, Restaurants & Leisure: 3 of 5;

Household Durables: 2 of 4; Internet & Catalog

Retail: 1 of 3; Media 0 of 1; Multiline Retail: 3

of 4; Specialty Retail: 3 of 8; Textiles, Apparel

& Luxury Goods: 2 of 5

Consumer Discretionary Global 500

Water management and governance

Company Leading Practice Example

H&M Hennes & Mauritz Water accounting andsupplier engagement

Monitors water efficiency among its suppliers; in 2010, the company collected datafrom 326 manufacturing sites

PPR Goal setting and supplierengagement

Subsidiary Puma set target of reducing water use by 25% between 2010 and 2015in both its own operations and those of its strategic manufacturing partners and haslaunched its environmental reporting tool at 70 sites to help partners monitor waterconsumption

Starwood Hotels &Resorts Worldwide

Stakeholder engagement Encouraged awareness-building among employees to identify site-level improvementopportunities and locally relevant water-related issues

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

91%

93%

Report a policy, strategy or plan

55%

57%

Board-level oversight of policy, strategy or plan

73%

57%

Report concrete targets or goals

95%

94%

Report actions to manage resources or engage stakeholders

91%

95%

Able to report water withdrawals

68%

72%

Able to identify linkages or trade-offs between water and carbon

41%

26%

Require key suppliers to report water use, risks and management

27%58%

Able to report water recycling/reuse

Percentage of respondents

Leading practice examples

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100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Perc

entageofrespondents

14%

ConsumerDisc.

36%

50%

7%

Global500

37%

55%

38%

Global500

35%

27%

41%

ConsumerDisc.

23%

36%

18%

ConsumerDisc.

41%

41%

8%

Global500

29%

63%

Risk in directoperations

Risk insupply chain

Opportunities

Yes No Dont know

Water-related risks and opportunities in direct

operations and the supply chain

Exposure to risks and opportunities

Ford Motor: limiting impact in a water-stressed region

For the past few years the Mexican state of Chihuahua has suffered droughts caused by below average rainfalland as a result, the Rio Grande River that supplies the region is unable to support increasing development anda growing population. As water resources became stressed at the Ford Motor Chihuahua Engine Plant (CHEP)in Chihuahua City, the company investigated ways to reduce water use and limit impact to the surroundingcommunity. Six years ago, Ford Motor began making changes in its manufacturing process at CHEP; today,the plant uses no potable water except for human consumption. Given that the industrial park where CHEP islocated draws from the same groundwater resources as the local community, Ford Motor has made severalchanges that rely on recycled and other treated gray water to meet the needs of the plant while preservingfreshwater reserves. These initiatives combine to save more than 32,000 cubic meters of water a year, andinclude using treated gray water from the city for compressor cooling, rethinking water-intensive manufacturingprocesses, and using advanced treatment and filtration techniques. In the future, Ford Motor plans to continue toassess opportunities to use advanced water conservation technologies across its operations, particularly in otherwater-stressed regions.

99.9% of [water consumption from Puma operations

and across our global supply chain] was from our supply

chain, of which 89% was consumed in either Tier 3 or 4.

This information will be used to highlight the importance

of action deeper down the supply chain.

Puma

Responding to risk

86% of Consumer Discretionary respondents are ableto identify whether they are exposed to risks in directoperations (compared to 93% in the Global 500), andonly 68% of respondents can identify which operations

are located in regions at risk. This suggests thatmanagement of water-related risks in direct operations isa lower priority in this sector.

The percentage of Consumer Discretionary respondentsthat report exposure to risk in the supply chain (36%)is greater than in the Global 500 (27%), but stepsto manage these risks are also greater; 41% of thesector requires their suppliers to report water-relatedinformation, compared to only 26% of the Global 500.

Frequently reported risks include water stress orscarcity, declining water quality, and reputationaldamage. Hyundai Mobis reports potential reductions

in productivity due to water scarcity; Carnival reportsthat negative press concerning spills could impact thecompanys brand.

Seizing opportunity

A lower percentage of Consumer Discretionaryrespondents report water-related opportunities (41%)compared to the Global 500 (63%).

In addition to improving brand value throughproactive water stewardship, some respondents areleveraging products with water-related benefits, suchas treatment technologies and other technologiesto conserve water. Phillips Electronics identifiesthe production of UV lamps for water purificationprocesses as a business opportunity.

Respondents also report implementing more efficienttechnologies in direct operations to reduce both wateruse and cost.

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Consumer Staples

Key findings

1. The Consumer Staples sector is highly engaged

with a response rate of 73%.2. According to respondents, the supply chain is

a significant source of risk; the percentage of

companies reporting exposure to risk in the

supply chain (60%) is the highest among sectors.

3. Many companies in Consumer Staples identify

water-related opportunities.

Leading practices

Compared to other sectors, a higher percentageof Consumer Staples respondents (80%) have setconcrete, quantitative water-related targets or goals.

All respondents in the sector have water-relatedpolicies, strategies, or plans, which address a rangeof issues including understanding water scarcity andquality, maximizing efficiency and recycling/reuse,replenishing local watersheds, investing in supplierand community programs, and engaging externalstakeholders.

We are keenly aware that water has the ability to

immediately impact our operations.

Molson Coors

73%Response rate: (27/37)

Industries within sector:

Beverages: 7 of 8; Food & Staples Retailing:5 of10; Food Products: 5 of 8; Household Products:

1 of 1; Personal Products: 4 of 4; Tobacco: 5 of 6

Consumer Staples Global 500

Water management and governance

Company Leading Practice Example

Coca-Co la Company Water s trategydevelopment

Launched global water strategy that addresses water management at each of thecompanys 900 bottling plants and extends outside operations to include watershedprotection, supporting sustainable communities, and helping raise awareness andinspire action around global water challenges

Diageo Stakeholder engagement Water of Life (WOL) initiative aims to provide safe drinking water to communities inneed while also improving the companys license to operate; since 2008, Diageo haslaunched 150 WOL projects in 15 countries

LOreal Goal setting Established an ambitious goal for factories and distribution centers to reduce waterconsumption by 50% per finished product between 2005 and 2015

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

100%

93%

Report a policy, strategy or plan

60%

57%

Board-level oversight of policy, strategy or plan

80%

57%

Report concrete targets or goals

96%

94%

Report actions to manage resources or engage stakeholders

100%

95%

Able to report water withdrawals

88%

72%

Able to identify linkages or trade-offs between water and carbon

32%

26%

Require key suppliers to report water use, risks and management

36%58%

Able to report water recycling/reuse

Percentage of respondents

Leading practice examples

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100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Pe

rcentageofrespondents

4%

ConsumerStaples

32%

64%

7%

Global500

37%

55%

38%

Global500

35%

27%

24%

ConsumerStaples

16%

60%

12%

ConsumerStaples

12%

76%

8%

Global500

29%

63%

Risk in directoperations

Risk insupply chain

Opportunities

Yes No Dont know

Water-related risks and opportunities in direct

operations and the supply chain

Exposure to risks and opportunities

Unilever: water-related product innovation

Unilever is already measuring water in products and water used by consumers in water-scarce countries.The company has set ambitious targets for different product types and is driving product innovation in waterpurification technologies.

As an example, Pureit is an affordable in-home water purifier that makes unsafe water potable; it provides wateras safe as boiled without needing electricity or pressurized tap water. Unilever has already made clean drinkingwater available to over 25 million consumers in India and has recently launched Pureit in Bangladesh, Mexico,and Indonesia.

The company aims to reach 500 million people worldwide by 2020.

Responding to risk

72% of Consumer Staples respondents report exposureto water-related risk, compared to 59% in the Global500. The percentage of respondents identifyingexposure to risk in direct operations (64%) and thesupply chain (60%) are similar, indicating that risk in thesupply chain could be significant.

However, a large percentage of respondents are ableto identify whether their supply chain is exposed torisk (76%) and identify key water-intensive inputs fromregions with water-related risk (48%) compared to theGlobal 500 (62%, 31%).

Experiencing business impacts

Approximately 40% of respondents have experiencedwat

CDP Water Disclosure Global Report 2011

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