Companies Hit by Rising Water Costs

Higher costs of water as a result of droughts and floods linked to climate change are severely affecting corporate financial performance globally.

Companies worldwide are being warned that taking water preservation measures is now vital, and that those whole fail to act are likely to face mounting financial losses.

The Carbon Disclosure Project (CDP), a not-for-profit organisation that tracks corporate environmental performance, says a combination of droughts and floods linked to climate change, plus a tightening of water regulations, are costing companies billions of dollars.

In a new report, Thirsty business:  Why water is vital to climate action, CDP says data supplied by more than 600 companies around the world showed that corporate costs related to water amounted to US$14 billion over the last financial year. These costs include preservation measures put in place by many companies.

Permanent condition
In drought-hit California, which has been suffering water shortages for several years, the US aerospace and defence firm United Technologies Corporation invested US$1.7 million last year in water-saving infrastructure at its six sites in southern California − where, it says, shortages will be “a permanent condition”.
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Drought also affected the operations of the US multinational General Motors, which says it incurred costs of $8 million in 2015 due to drought conditions at various locations, and also because of higher utility charges.

But by far the biggest corporate water cost in 2015 noted by CDP was the $10 billion spent by Japan’s largest power company, TEPCO, which is now effectively under state control.
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Risk management
“The energy sector is a major laggard and the least transparent about water risks,” CDP reports.

It says 77 of the 109 energy companies surveyed did not provide information about their water risk management policies.  These included the giant concerns ExxonMobil, Chevron and Shell.

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