This is the first of a four-part series taking a closer look at how 72 companies in four industries — beverage, apparel, food and high-tech — performed in Ceres’ new Valuing Water Finance Initiative Benchmark report, which assesses how companies are valuing and acting on water as a financial risk and driving the systemic changes needed to protect freshwater systems around the world.
The world is running out of water, a crisis that the beverage industry, which relies so heavily on water for nearly every stage of production, knows all too well. Yet while more beverage companies are making strides in responding to this threat by using less water, they need to make similar progress in managing water pollution — including from pesticides, herbicides and fungicides — that’s the result of making the beverages we enjoy every day.
Water is a shared resource. So polluted discharges and runoff — most of which stem from the practices used to grow the crops used by the industry, including sugar, barley and tea — pose serious health risks to communities and ecosystems. This translates to a financial risk for companies. Contributing to water pollution threatens the supply of clean water companies need to produce their products and exposes them to the risk of losing their license to operate — or facing fines or penalties.
A recent Ceres report, benchmarking water stewardship among 17 global beverage companies highlights how companies from across the industry can close the gaps on addressing water quality issues — although most have significant work ahead. Here are steps beverage companies can take to better mitigate their water quality impacts:
Establish water quality targets
Companies need to set targets to reduce the negative impacts of their direct operations on water quality. But only four companies we analyzed have done that.
PepsiCo is among those making progress. The company has set a strategy that addresses water quality. For instance, as part of its goal of becoming net water positive in all of its operations, the company is working toward ensuring all wastewater produced by its manufacturing facilities adhere to high environmental protection standards outlined in the company’s Discharge of Process Wastewater Standard, which aligns with the World Bank’s International Finance Council and Business for Social Responsibility’s Sustainable Water Group criteria.
Another promising example is Heineken, which has a water pollution reduction target for this year ensuring 100 percent of wastewater from its breweries is treated before being discharged into surface water.
Companies should also disclose information about wastewater discharges from their operations, so they — and their investors — have a true understanding of their impacts and how they can address them. Our findings were encouraging, with 14 out of 17 companies reporting how much wastewater is released from all operations. Additionally, 12 of the companies provide information about the pollutants of concern that are in their wastewater discharges. These include pesticides, fertilizers, phthalates and bisphenol A — known more commonly as BPA — that can affect health or the environment. Some companies also provide details about potential water quality threats from pollutants, ranging from sediment loading, which is harmful to aquatic life, to the leaching or draining of chemicals into groundwater, to algae blooms from excess nitrogen.
Focus on supply chains
As important as it is for companies to set goals to reduce water quality impacts for their direct operations or disclose their impacts, another glaring gap that beverage companies must address is assessing water use within supply chains. Tackling water quality issues within supply chains is critical because a substantial portion of potential pollution occurs during agricultural production. Companies such as ABinBev are moving in the right direction. The company’s Global Barley Research Center and research partners develop barley crop management protocols to inform farmers’ nutrient applications. Agronomists then provide farmers tailored nutrient management advice to help ensure their practices achieve good yields while minimizing the risk of nutrient pollution.
Assessing risks and challenges
Investors with a stake in beverage companies are among those paying more attention to water quality repercussions from the industry. Addressing negative impacts to water quality across companies’ value chains is among the six Corporate Expectations that investors established last year as part of Ceres’ Valuing Water Finance Initiative, a global investor-led effort to engage large companies to act on water as a financial risk and make the large-scale changes needed to better protect freshwater supplies.
Our new benchmark assesses the water management practices of 72 companies that are the focus of the initiative — the beverage companies among them — against the expectations, which set an ambition for companies to reach by 2030. This timeline is critical to slowing the pace of deteriorating water resources threatening communities, ecosystems and economies across the globe and meeting the United Nations 2030 Sustainable Development Goal for Water (SDG6).
Growing demand for beverages and resulting water impacts, paired with escalating water scarcity and pollution across the globe, will continue to raise financial risks facing the beverage industry. Companies need to confront these challenges head-on, elevating sustainable water management — especially where current efforts are lacking — as a critical priority.
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