Report: Companies should disclose water use

Feb 26, 2009      Associated Press Online

By GARANCE BURKE

FRESNO, Calif., Feb. 26, 2009 (AP Online delivered by Newstex) -- As more companies become conscious of their carbon footprint, a new movement is urging corporations to track their "water footprint" as well, or risk financial losses as freshwater supplies dry up around the globe.

Major corporations such as Coca-Cola Co. (NYSE:KO) now disclose the amount of water they use in financial reports, in an attempt to show investors they can confront threats to their water supply, according to a study released Thursday by the nonprofit Pacific Institute.

But dozens of high-tech companies, farms and soda bottlers have lost millions because they didn't forsee the risks posed by droughts and floods tied to global warming, researchers found in a survey of 121 companies in water-intensive industries.

Now, as markets are reeling, investors can't afford to ignore the crucial role water plays for some of their favorite bluechips, and how it could affect their retirement accounts, said Anne Stausboll, who manages the nation's largest public pension fund.

"Coming out of this economic crisis, investors will be looking differently at risk," said Stausboll, CEO of the California Public Employees' Retirement System. "And water-related risks are imbedded in all of our investments, from the companies we invest in to the buildings we own."

CalPERS, for example, expects to lose money on their investments tied to California's farming industry, which suffered $260 million in crop losses alone last year due to a crippling drought, she said.

Water scarcity also has caused companies across the world to shut down plants: A few years ago, both Pepsi Co. and Coca-Cola's bottlers lost their licenses to use groundwater in Kerala, India, after authorities revoked or denied the licenses amid drought.

Shortages also could drain away profits in the high-tech industry, which relies on billions of gallons of pure water for producing silicon chips, the report found.

On Monday, scientists with the Intergovernmental Panel on Climate Change warned climate change will increase the risk of droughts, heat waves and floods if average global temperatures rise by just 1.8 degrees Fahrenheit.

"Climate change is excerbating water scarcity problems around the world, yet few businesses are paying attention," said Mindy Luber, the president of Ceres, a Boston-based network of investors and environmental groups that commissioned the report. "What investors need is more information to make the smart decisions they're more than capable of making."

The Pacific Institute plans to present some of their findings at the World Water Forum in Istanbul next month in partnership with the United Nations, to help companies move toward water sustainability.

Some are already well on their way.

Levi Strauss & Co., the San Francisco-based maker of 501 jeans, has reduced the amount of water used to make some styles of jeans by 30 percent in the last year, company officials said.

"We did a study and found that one pair of 501s consumed 918 gallons of water in its lifecycle -- everything from growing the cotton that's used to make the jeans, to the number of times it goes in the washing machine," said Michael Kobori, a vice president for supply chain social and environmental sustainability. "The water we use is one of our most significant impacts on the environment, and we saw we had to reduce our footprint."

Newstex ID: AP-0001-32352040

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