A new report titled “Catching up with the leaders: Accelerating corporate water stewardship in Europe” analyzed water-related data from 121 European companies. It reveals a growing disparity between the few leading companies and those who are lagging in key areas of water management, creating risk for themselves as well as investors.

Given that the EU is already looking to integrate the SDGs into its policy framework and current priorities of the European Commission[i], regulatory requirements will present opportunities to companies who can advance progress on the goals, while initially posing regulatory risk to those that are under-prepared.

Backed by 634 investors globally with €65 trillion in assets, this report highlights companies’ performance across five key metrics including transparency, risk assessment, measuring and monitoring, governance and strategy, and engagement and response.

European companies perform well when it comes to water governance issues with 76% of European companies reporting board level management, however increased disclosure on water-related issues, conducting risk assessments beyond direct operations and engaging with stakeholders is necessary to ensure future water security.

A look into European companies taking action:

BASF SE has made its extensive supply chain an opportunity to spread water stewardship practices widely and build business resilience; the company has put in place a training program for its Brazilian and Chinese suppliers, educating them on sustainability standard, with a goal of reaching 2,000 suppliers by 2019

Danone carries out extensive community and stakeholder engagement to ensure continued access to water resources and to avoid reputational exposures. It ensures its subsidiaries have tools in place for stakeholder engagement processes, works with local communities on projects including creating nature reserves and participates in a major watershed protection program in San Juan, Mexico.

SABMiller is responding to growing water stress and declining water quality with several community engagement programs, partnering with WWF and working with The Nature Conservancy to help hop suppliers and barley farmers respectively mitigate water risk.

Industria de Diseño Textil (Inditex) has implemented a Global Water Management Strategy, including its shift to less water-intensive organic cotton, its ‘Green to Wear’ standard and extends to its support for the Bangladesh Water PaCT: Partnership for Cleaner Textile

Holmen AB worked with local farmers in its Workington mill in the UK while developing a bio-mass fired heat and power plant to encourage them to grow willow on marginal land to supply feedstock, in turn providing long term jobs, mitigating flood risks and improving water quality by reducing excess run-off

Quote from Morgan Gillespy, Head of CDP Water Program:

While we celebrate the high representation of European leaders on CDP’s Water A-List, our analysis confirms the two speeds of water stewardship shown from European companies. It is impossible to ignore the growing gap between those leading water stewardship efforts and those companies being left behind. Whilst European companies perform well in governance of water issues, they must improve in reporting on key issues relating to water management, particularly as investors are calling for more detail. The latter will need to address these issues particularly as governments and competitors look to implement and benefit from the Paris Agreement.

Quote from Magdalena Kettis, Head of Thematic Research, Nordea Asset Management

The feedback from companies has been positive, and a number of corporate and industry actions have been initiated. However, for us and other investors to be able to assess actions and performance related to water issues we need better water-related data. We expect more companies to report, and ask their suppliers to report, on their water management via CDP.”