DIRECTIONS

SUPPLEMENT
February/
march 10

Water: the elephant

in the room
Why water is the big issue
getting ready to charge
Directions Supplement
February/March 10

Welcome to Directions
Sustainability team The Marsh Center for Risk Insights found that 40% of Fortune 1000
salterbaxter
companies recognised the potential impact of water shortages, yet
only 17% felt prepared for it. Water is clearly the elephant in the
room. We thought for the first edition of Directions in 2010 we’d pay
it some attention.
So we’ve invited Dave Tickner of WWF-UK, to give us an overview
of the challenge water scarcity presents. Marcus Norton, Head of
Water Disclosure at CDP, explains why business does not have the
luxury of time. And to provide an insight into who’s saying what,
salterbaxter provide a snapshot review of some notable water
babies, and some noticeable by their absence from the debate.

The Intergovernmental Panel on Climate
Change has stated that a 2-3°C rise in global
temperatures could result in water scarcity
for over 3 billion people – almost half of the
world’s population. The ACCA identified water
as the next big issue after climate change;
issues of supply and fair use are becoming
an increasing challenge for business in many
parts of the world; and there is a compelling
argument that the water challenge is
inextricably linked to climate change. Water
plays an essential role for many industries
so surely it should be high on corporate
agendas, but is it? We’ve noted an air of
complacency amongst business – many are
aware of the water issue but few are currently
responding to it or indeed prepared to deal
with it head on.
Business forums like the CEO Water Mandate
have helped to distil the debate further. But
is all this working to improve how businesses
approach the issue? With 40% of Fortune
1000 companies* agreeing that the impact
of a water shortage on their business would
be ‘severe’ or ‘catastrophic’, we would expect
a large number to be prepared for the crisis.
But only 17% said they actually were.
The Polaris Institute, amongst others, have
voiced concerns over initiatives such as the
CEO Water Mandate, stating they are more of
a corporate PR effort to gain greater control
over water resources and services. We felt it
would be worth taking a look at a selection of
businesses to see who is talking about water,
what they are saying and what is being done.

It’s fair to say that we are all increasingly *The Marsh Center for Risk Insights.
aware of the scale of the water issue.
Initiatives from institutes such as the World
Economic Forum (WEF) and the Pacific
Institute have increased awareness of the
water challenge and businesses’ recognition
of its importance.

Less than 1%: business’ contribution

to online dialogue on water
Salterbaxter has recently set up an online
issues tracker, powered by FindAgent*.
It is a tool which enables you to chart online
conversations on any number of issues,
providing insight into stakeholder debate
and opinion. We did a search for online
debate and dialogue around water post
COP15. Top line findings show that of the
4,452 online postings from 19/12/09 to
07/01/10, almost a third of posts were
from bloggers and opinion formers (1,449).
Another third were press or news sites,
and only 33 posts (which is under 1%)
were businesses. It looks like businesses
are noticeably absent from the debate
and are not thinking about how to
effectively engage with stakeholders
on this issue.

* Salterbaxter and FindAgent are working together on issues

tracking and analysis services for corporate responsibility.
If you would like more information please get in touch.

3bn
People who will suffer
water shortages as a
result of a 2–3°C rise in
global temperatures.
17%
Of Fortune 1000 companies*
said they actually were prepared
for the crisis.
Tackling the elephant in the room
We’ve picked ten of the CEO Water Mandate
signatory companies and looked at their public
disclosures. We found a range of approaches,
some detailed, some not and we’ve grouped
them into those tackling the elephant in the
room, and those only just getting started.
Bayer:
Water is identified as one of the three key
issues that Bayer face. Bayer communicate
an understanding of the business benefits,
have a vested interest in good water
management because it needs to cool
and operate production facilities, and use
technology to come up with solutions to the
issue. Bayer focus on innovative solutions to
areas such as effective wastewater cleaning,
energy efficiency through nanotechnology
and solutions for agriculture.
Carlsberg:
Carlsberg uses 3.7 hectolitres of water to
make 1 hectolitre of beer (2008) making it
the most efficient global brewing company
in terms of water use. And it plans to cut
use by a further 11% by 2012, taking water
use down to 3.3hl per hl of beer. It aims
to establish partnerships with local and
international organisations to further improve
water efficiency. Carlsberg Poland’s Bosman
Brewery is operating one of Europe’s most
compact and efficient waste water treatment
plants – one of less than ten in the world at the
moment. We look forward to reading more
about progress against promises soon.
Coca-Cola:
With 1.6 billion servings consumed each day,
Coca-Cola uses a lot of water to make it’s
drinks. Globally it uses 2.43 litres of water for
each litre of drinks produced, in the UK
this drops to an impressive 1.5 litres. It is
targeting a 20% improvement in water
efficiency by 2012 based on 2004 figures.
Global action includes water-risk surveys
for each of their 79 production facilities
and Coca-Cola is looking to benefit from
collective action: “to magnify our efforts,
we work with peer industries, sharing best
practices and benchmarking our progress”.
A good example of a company tackling the
issue head on and in a collective way – but
it is one of it’s biggest issues.
40%
Of Fortune 1000 companies*
agree that the impact of a water
shortage on their business would
be ‘severe’ or ‘catastrophic’.
H&M:
H&M does not own any production facilities
so aim to find solutions for impacts within the
supply chain – not only with its direct suppliers
but deeper in the supply chain with indirect
suppliers. H&M see’s this as essential to
establishing an accurate water footprint. The
aim is to broaden initiatives on the issue to
focus on water consumption in addition to
wastewater, particularly in fabric production
and dyeing. H&M realises the influence it
can have on suppliers to help resolve
indirect impacts and bring about positive
change, a good example of meeting the
supply chain and collective action elements
of the Water Mandate.
Nestlé:
Nestlé is probably the most advanced of the
batch in terms of the time it has dedicated
to the subject. Water is one of its three key
issues and being the world’s leading bottled
water company so it should be. In 2008 it
achieved its water targets and reduced
water withdrawal per tonne of production
by 6%. Nestlé’s combined long-term and
short-term approach has resulted in a total
reduction in water withdrawals per tonne
of products by a massive 58% since 1999.
Reed Elsevier:
Reed Elsevier’s strength lies in robust
measurement of progress against targets
and clear presentation of data: “Absolute
water usage decreased 9% from 485,951 m3
in 2007 to 441,905 m3 in 2008, allowing us to
exceed our five year 10% reduction target. On
a normalised basis, we achieved an equivalent
24% reduction between 2007 and 2008 and
a 35% reduction between 2003 and 2008”.
Good performance on reducing water impacts
and communicating year-on-year data in a
comparable and transparent manner.
Directions Supplement
February/March 10
58%
Reduction in Nestlé’s water
withdrawals per tonne of
products since 1999.
3.3
Carlsberg’s target amount of
hectolitres of water used to make
one hectolitre of beer (versus
current figure of 3.7).
Just getting started…
Arup:
For Arup, leaders in building design and
construction, water should be a material
issue. The current efforts seem to fall short of
the mark. Yes, it supports Water for the World
(WftW), an initiative to educate and engage 11
to 18-year-olds on water, but we were
disappointed not to find more. Due to
the nature of the business we’d expect
to see Arup promoting sustainable water
management and best practices through
all aspects of its work. Perhaps this is
happening behind the scenes and is
simply not reported. In brief, Arup would
definitely benefit from more structured
communication on progress in tackling
sustainability issues.
Cadbury:
Cadbury is an innovative communicator
on sustainability. For the layperson, video
snapshots introduce issues followed by links
to Cadbury’s targets and more detail in the
‘I know my stuff’ section. Unfortunately
the coverage on water doesn’t match the
communications approach. Unlike carbon
and packaging there is no reduction target
for water, only a goal to have water reduction
plans at all sites by 2010. And the more
detailed section doesn’t give much more.
Performance is good (a 10% reduction
between 2006 and 2007) but reported
confusingly: the text gives data in tonnes
and the chart shows cubic metres! By
Cadbury’s own admission “our water strategy
is in the early stage of development” and
we’d expect to see more coming soon.
GSK:
Unfortunately it is difficult to find anything
in GSK’s site on water as it’s hidden deep
within a hierarchy of subjects. The approach
is mainly housekeeping – aiming to reduce
water use, reuse it when feasible and treat
wastewater to minimise adverse
environmental impacts. Snore. It does set
a target to reduce water consumption by
2% per annum per unit of sales which
equates to an 8% saving by the end of 2010.
But without demonstrating a real knowledge
of where the impact of its water usage falls,
this doesn’t appear to be a strategic approach.
Rather surprising for a company that tackles
sustainability issues so well in other areas.
Shell:
Royal Dutch Shell seems to understand the
scale of the water issue stating that by 2025
two-thirds of the world’s population could be
living with water stress. This doesn’t translate
to its own operations however, as it goes on to
state that its industry is “not a big water user”.
This is followed by data showing Shell used
approximately 224 million m3 of fresh water in
2008, significantly more than many of the
CEO Water Mandate peer companies covered
here. Shell is a big organisation and given the
scale of this water use we feel it should be
doing more to address the issue or at least
matching impacts more closely with the wider
water issue.
224
million m3
Of fresh water used by Shell in
2008.
So of the ten companies we’ve looked at, six
are making headway and four need to be more
transparent in their approach and realise the
impact water scarcity can have on them.
Although many businesses are aware of the
elephant in the room, many don’t seem
prepared for the challenge, don’t realise the
potential direct and indirect supply chain
impacts and don’t have plans in place to deal
with the growing issue. Overall we’d like to see
more disclosure and engagement. There’s just
not enough conversation and debate on this
issue from the corporate world. So going back
to the original question, is there an air of
complacency? Yes. Many businesses are not
acknowledging the scale of the water issue.
 A river should run through it
Dave Tickner Ensuring water security will be a defining challenge for the
Head of Freshwater
Programmes
21st Century. Whether your concern is food or energy security,
WWF-UK poverty reduction or business risk, climate change, conflict or
biodiversity, managing water sustainably is a critical foundation.
The litmus test of water security is the continued flow of the rivers,
lakes and aquifers from which we take our water.

“It’s not like the stuff falls from the sky”. It was
WWF’s Living Planet Report has concluded
1996, and I was chatting in the pub with Alison, that declines in freshwater biodiversity are
a drily humorous colleague of mine. She was probably sharper than those in the rainforests.
complaining about her rising water bill. Her But water scarcity affects people as much as
ironic observation has stayed with me. wildlife. Women and girls have to travel further
to get water for domestic use, preventing
Those of us living in the UK are accustomed them from working or attending school.
to water falling from the sky. But it’s different Farmers struggle to grow crops when
for Hammad, my counterpart in WWF Pakistan. irrigation is impossible. Hydropower dams
His is a country with a largely agricultural can’t generate electricity (a recent problem
economy and low rainfall. Without the glacier- across Latin America). Reports of deadly
fed flow of the Indus River, which feeds one conflict between water users trickle in from
of the world’s largest irrigation systems, East Africa with depressing regularity.
Pakistan’s rapidly growing population would Uncertainty over rainfall and river flows can
be in trouble. Already demand for water and be harder to deal with than simple lack of
its inefficient use means that the Indus often water and will probably increase as climate
dries up before it reaches users downstream. change takes hold.

Water scarcity in far-flung nations can affect

It’s not like the stuff us here in the UK too. When drought reduces
farm output, as in Australia recently, world

falls from the sky
Compare world maps of population and
hydrology and you’ll be alarmed at how
many people live in places where water
resources are similarly stretched. Around
two billion people live in water stressed
regions now and this is a number that’s
likely to grow in coming decades.
grain prices are hiked which affects everyone
and in some areas so-called tortilla riots can
follow. WWF’s UK Water Footprint report
showed that the average citizen in this country
soaks up 4,645 litres of the world’s water
every day. But only 150 litres flows through
our taps. The rest is “virtual water” used
mostly during the cultivation and processing
of the food and fibres we use. Although the
size of these numbers is startling, the key is to
actually understand and reduce our impacts
on water-scarce regions, rather than obsessing
about the total size of our footprint. This is a
crucial difference between carbon and water.

But there’s good news. To quote the journalist

Fred Pearce, almost everywhere in the world
we manage water “spectacularly badly”.
Directions Supplement
February/March 10
4,645
WWF’s UK Water Footprint report
showed that the average citizen in
this country soaks up 4,645 litres
of the world’s water every day.
You might ask why this is good news? Well it
implies that in most places there is, in theory,
enough water. There’s no need yet to seek out
new supplies on another planet. We just need
to manage the stuff more wisely.
There’s another reason to be cautiously
optimistic. The last decade has seen a wave
of progressive water legislation across the
world. Starting in South Africa and Mexico
and extending through the European Union,
Brazil and China, governments have passed
laws that prescribe integrated water
management across entire catchments. The
emphasis is on meeting people’s basic needs
first and then allocating remaining water
equitably. Importantly, these laws emphasise
the importance of protecting sources of water
– our rivers, lakes and aquifers, not just being
fair with who uses the resources.
Implementing these laws is challenging.
Capacity in water management institutions
is limited, hydrological data is sparse and
awareness is low among politicians of the
return on investment from better water
management or the risks of doing nothing.
This is where businesses, motivated by
enlightened self-interest, can contribute.
Pioneering companies are realising that their
supply chains and operations rely on water
stewardship beyond the factory walls. Put
simply, the business case goes something
like this:
My business uses water and so has an impact
on other water users and the environment.
If I use too much water, other users complain
and I lose my social license to operate. If they
use too much water, my business suffers from
shortages. If we all use too much water, the
government imposes stricter regulation. If
the environment and local communities suffer
from our over-use of water, my business may
be blamed. So I should work with other users,
governments and NGOs to manage water
resources better to reduce our shared risk.
Encouragingly, new initiatives such as the
UN Global Compact’s CEO Water Mandate
are helping to stimulate this approach. WWF
has helped to establish the Alliance for Water
Stewardship and the Water Footprint Network
which are developing tools and standards to
guide private sector efforts; we have published
Investigating Shared Risk in Water; and we
work in partnership with SABMiller, Marks &
Spencer and others to address shared risks
in key business locations.
But a few progressive companies and
voluntary initiatives is only the tip of the
iceberg. Many more companies do not look
at water as a priority issue than do. Fewer
still look at water impacts beyond their
factory gates, up and down the supply chain.
Somewhat overshadowed by the wildfire
debate on climate change of recent years,
water is certainly an elephant in many a
boardroom. But it is certain that growing
populations and increasing climate change
impacts will only serve to intensify the
pressure on water resources around the world
and make all water users begin to take notice.
As I write winter snow is falling outside my
window and although we face challenges I am
optimistic. This is because sustainable water
management, including better use of the
water we have, is increasingly regarded as
a necessity by governments and businesses
alike. Admittedly I am based in the UK and
perhaps my outlook would be different if I
was, like my colleague Hammad in Pakistan,
one of the 2 billion living at this moment in
areas of water stress.
2bn
The amount of people currently
living in water-stressed regions.

Marcus Norton
Head of CDP Water Disclosure
Carbon Disclosure Project
Rising to the looming water challenge
If climate change is the shark, water is
its teeth – it is through water that climate
change will bite. Changing patterns of
precipitation and shrinking glaciers, both
of which are already reported in the IPCC’s
Fourth Assessment report, are affecting
the supply of this critical resource. Pollution
adds an additional layer of complication.
Meanwhile demand for freshwater is growing
inexorably due to a rapidly rising world
population, urbanization and rising per capita
consumption. The result, according to an
OECD forecast, is that 47% of the world’s
population will be living in areas of high
The first step for business in tackling the
rising challenge of water is to become aware
of their water usage, risks and opportunities.
CDP Water Disclosure raises businesses’
awareness and understanding of water-related
issues by requesting that they measure and
disclose high quality information on these
issues. This puts them in a position to take
action and improve performance. Importantly,
the information collected by CDP Water
Disclosure is made available to investors and
other stakeholders for integration into their
investment decision making, thus replicating
the tried-and-tested approach that CDP has

92%
water stress by 2030 unless new policies
are introduced and leading to changes to
how water is used.
Here at the Carbon Disclosure Project (CDP)
we repeatedly hear from investors that water
Of FTSE 100 and FTSE 350 is an increasingly important issue to them.
companies agree that a water In its 2008 report “Watching water: A guide
crisis is looming. to evaluating corporate risks in a thirsty
world”, JP Morgan Global Equity Research
recommended that investors assess the
reliance of their portfolios on water resources
and their vulnerability to water availability
and pollution. While a recent survey by WSP
Environment & Energy of 100 companies from
the FTSE 100 and FTSE 350 found that 92%
agree that a water crisis is looming and 70%
believe that the risks of water scarcity are
equal to those of carbon emissions.
With a looming Companies’ water risks take a number of
water crisis forms, including disruptions to supply within
their own operations or their supply chains;
business does regulation that increases the price of water
not have the or restricts its availability to particular
businesses or sectors; and reputational
luxury of time issues around the use of this shared,
life-sustaining resource.
In the face of a looming crisis, what can be
done by companies simply trying to carry
out their normal operations? The answer to
this is ‘a huge amount’. By considering water
as a strategic issue, companies will not only
be able to take action to mitigate these risks
pioneered for carbon and climate change.
In 2010 CDP Water Disclosure will send
a questionnaire on behalf of institutional
investors to approximately 300 of the
world’s largest corporations in water
intensive sectors including chemicals,
FMCGs, food and beverage, mining, paper
and forest products, pharmaceuticals, power
generation and semiconductor manufacturing.
The questionnaire will ask companies for
information on their water usage, the risks
and opportunities in their own operations
and their supply chains, and their water
management and improvement plans.
There are challenges to be overcome.
Whereas it does not matter whether a tonne
of CO2 is emitted in Sydney or Stockholm in
terms of environmental impact, the impact
of extracting a cubic metre of water varies
enormously with geography. The ‘type’ of
water used – ‘blue’ water from rivers, lakes
or underground aquifers, or ‘green’ rainwater
stored in the soil as soil moisture – also
matters, as does the quality of the water
both before and after it is used.
As businesses increasingly tackle the issue
of water, accepted standards will need to be
adopted for measuring and reporting water
use. While CDP Water Disclosure will not seek
to develop these standards, we will work with
the leading global organisations (such as GRI,
WBCSD, CEO Water Mandate, WWF and the

70%
in a cost-effective way, but also seize
opportunities such as reducing their operating
costs through efficiency measures, helping
shape the regulatory framework they operate
in, or capturing market share by offering
water-efficient products that meet their
customers’ needs. So having a positive effect
on the community and improving their social
licence to operate.
Believe that the risks of water
scarcity are equal to those of
carbon emissions.
Water Footprint Network) to facilitate
the adoption of emerging best practice in
these areas.
With a looming water crisis business does
not have the luxury of time. Raising awareness
of water usage, risk and opportunity is a vital
first step in tackling this issue. There is no
time to lose in starting on this journey.
 About us
Contact:
Emily Measor
Salterbaxter advise companies
emeasor@salterbaxter.com
Tel +44 (0)20 7229 5720
on strategy, branding, corporate
communications and design –
providing creative communications
The Directions Supplements
support our main Directions
report. The main report is
published each year and is
now regarded as the UK’s
for big business issues.
most comprehensive analysis
of the trends and issues in We work on a wide variety of corporate communications assignments
CR communications. If you for our clients including brand strategy and implementation, annual
want a copy, call us on the reports, digital communications and employee engagement. But we are
number below or email increasingly being seen as one of Europe’s leading sustainability
directions@salterbaxter.com
communications consultancies, with an unrivalled breadth and depth of
experience across multiple sectors and multiple countries. We offer a full
range of corporate responsibility and sustainability communications
services – from board level strategy consulting to the design, writing and
delivery of printed and online communications. And everything in between.
Our team of sustainability consultants is basically designed to be able to
help major corporations tackle every aspect of the sustainability agenda:
– Development of corporate and – Social media strategy
brand sustainability strategies and programmes
– Stakeholder engagement – Writing
– Reporting – Workshops and training
– Single issue campaigns – Gap analysis
202 Kensington Church Street – Internal communications/ – Research
London W8 4DP
employee engagement
Tel +44 (0)20 7229 5720 – Events
Fax +44 (0)20 7229 5721
www.salterbaxter.com Clients
Our sustainability clients are the leading corporations in multiple sectors
across the whole of Europe. Latest ones include:
UK EUROPE
The carbon impact of this paper ArcelorMittal adidas Group
has been measured and balanced
through the World Land Trust, an AXA UK Carlsberg Group
ecological charity Bacardi E.ON Group
BAE Systems Fortum
Camelot H&M
Coca-Cola GB & CCE ING Group
E.ON UK LEGO
Friends Provident Marine Harvest
This supplement is printed on
Land Securities Millicom International
Think Bright and is supplied by Morrisons Nokia
Howard Smith. It is an FSC (Forest
Stewardship Council) certified
02 UK Orkla
material and is 100% recyclable. Rolls-Royce Telefónica 02 Europe
www.hspg.com
Tullow Oil
Printed by Granite, an ISO 14001 Vodafone
certified and FSC accredited
company. TT-COC-002238
www.granitecolour.com