Carbon reporting group launches Water Disclosure Project

Having encouraged over 2,500 companies to measure and report on their carbon footprint, the Carbon Disclosure Project (CDP) will today launch a new initiative designed to repeat the trick with firms' water footprints.

The group, which is backed by 475 institutional investors, will announce that from next year it is to send questionnaires on water use to approximately 300 of the world's largest corporations in water intensive sectors such as chemicals, consumer goods, food and beverage, mining, forestry, pharmaceuticals, power generation and semiconductor manufacturing.

Emulating the model pioneered the Carbon Disclosure Project, firms will be asked to detail their water use, water management and improvement plans, and the risk and opportunities presented by water use across their supply chains. The results will then be made available to institutional investors and summarised in an annual report to be published in late 2010.

Paul Dickinson, chief executive of the CDP said there was a strong commercial case for businesses to pay greater attention to water risks. "If climate change is the shark, then water is its teeth and it is an issue on which businesses need far greater levels of awareness and understanding," he said. "CDP Water Disclosure will raise this awareness and drive companies to take action to mitigate risks and seize opportunities."

Investors also need to be aware if businesses are exposed to risks of water shortages or disruption, according to Norges Bank Investment Management (NBIM), which is lead sponsor of CDP Water Disclosure project.

"As water becomes an increasingly constrained resource, it also becomes an investment issue," the company said in a statement. "It is vital that institutional investors have access to high quality information on how water-related risks threaten corporations, both directly and within their supply chains, in order to make better informed decisions and direct the flow of capital away from risks and towards solutions."

The new initiative was welcomed by UK environment secretary Hilary Benn, who said he hoped to see the success enjoyed by the CDP extended to cover water. "I am sure that as with carbon disclosure this will help us to understand water usage and as a consequence value this precious resource," he said.

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