Major local companies are set to suffer the impacts of water scarcity and declining quality in the next five years, making water conservation, water efficiency and effective water management an immediate challenge.
This was the finding of SA's first Water Disclosure Report, released by the National Business Initiative (NBI) on Friday. The report reveals that 85% of water-intensive users among the JSE Top 100 companies are exposed to water-related risk, with 70% believing risks to their direct operations could occur within the next five years.
Due to the near-term nature of water risks, the number of stakeholders involved, and the technological and capital requirements for solutions, the report urges companies to act immediately to prevent potentially devastating impacts.
The report notes that many companies have not assessed the true value of water because of a lack of data, and most still need to identify water risks in their supply chains. The majority have yet to calculate how their water resources will be impacted by climate change, supply disruptions and inefficient water use.
In late 2011, severe floods in Thailand and Cambodia not only swamped thousands of local businesses, but also had significant effects on the PC industry, hampering the global supply of hard drives. With Thailand accounting for up to 45% of worldwide hard drive production at the time, the floods resulted in an estimated 3.8 million-unit shortfall in PC shipments in the first quarter of 2012, according to global research firm IHS. The IDC predicted PC shipments could drop more than 20% from previous forecasts in the same period.
The Water Disclosure Report is a recent addition to the Carbon Disclosure Project (CDP), a global initiative compiling annual surveys to inform investors on the extent to which companies are meeting climate change commitments. The CDP is backed by 655 institutional investors with a combined $78 trillion in assets under management, tracking more than 4 500 of the world's largest companies across 60 countries. Introduced in 2010, the Water Disclosure Report now collects data on water use, strategies, risks and opportunities on behalf of 354 investors representing $43 trillion in assets.
In 2011, the CDP expanded the Water Disclosure Report to Australia and SA, as they are particularly water-stressed countries. It invited 56 of SA's largest water-intensive listed companies to participate, of which 26 took part.
While no listed IT companies were requested to submit data, electronics group Altron responded voluntarily, noting: “Water is fundamentally important for Altron, not just from an environmental compliance perspective, but also because water is used extensively in manufacturing processes at some of its operations and, where possible, savings should be made from an environmental as well as a cost point of view.”
Altron said in its 2011 integrated report that it has started to measure and track water usage and aims to set specific water reduction targets by 2013.
The report notes that if no action is taken, SA is expected to experience a 17% gap between water demand and supply by 2030, equating to a water shortfall of 2.7 billion cubic metres, and that some of the country's most economically important catchment areas will be worst affected.
“These trade-offs will be further complicated by an increasingly uneven and unpredictable supply of rainfall as a result of climate change, declining water quality, and reliance on significant water transfers from neighbouring countries, coupled with an ailing and overburdened water infrastructure system,” the report adds.
Faced with these challenges, NBI CEO Joanne Yawitch says in her foreword: “It is critical that more companies take cognisance of the level of risk posed by water and start to form partnerships with key stakeholders to work towards a comparable means of disclosing water use and develop collaborative solutions.”
Share