A Look At Freshwater

The Lempert Report
November 10, 2021

According to a new report, Feeding Ourselves Thirsty, produced by the sustainability nonprofit Ceres, 70% of the world’s freshwater supply is used by the food industry. The report lists the water scarcity strategies of 38 food and beverage companies and then graded them based on governance, corporate oversight, risk assessment, reduction targets and financial support for growers. The score was based on a scale of zero to 100. This is an important report as demand for freshwater is expected to increase by 20-30% by 2050 according to the United Nations.

The average score was 45. The highest score was Coca-Cola at 90, followed by Unilever and Anheuser-Busch InBev who both received scores of 83, followed by Nestle with a score of 80. Consumption of meat and animal products account for 27% of the world’s total water footprint according to FoodPrint, a non profit sustainability firm, so its not surprising that among the lowest scores were for JBS - 12, Perdue – 11, Sanderson Farms – 6 and Pilgrim’s Pride at 4. The meat producer with the highest score of 37 was Tyson.

The lowest score? Monster Beverage received a score of zero. Interestingly enough 53% of the companies rated actually linked executive compensation to water performance goals – that’s up from just 11% in 2015 – clearly the board rooms are listening. The Ceres report goes on to say that Abundant clean water is essential for food production – as an ingredient, for cleaning and growing raw materials, and as the principal agent in sanitizing plant machinery.

However, the vast majority of the food sector’s water use and water pollution footprint is associated with agricultural supply chains. Water risks from these supply chains include agricultural runoff, impaired ecosystems, regulatory risks, and limited local access to water.  While more companies are assessing water risks in their agricultural supply chains, the scope and rigor of these assessments is often limited.  Eighty-seven percent of the companies, they report, analyzed provided educational support to farmers to encourage adoption of practices to reduce water use and impacts, up from 70% in 2019 and 32% in 2015. More than half of the companies - 55% - provided direct financial incentives to farmers to encourage such practices, up from 40% in 2019 and 11% in 2015.

This analysis Ceres says, can also help food companies more effectively manage their water risks, which is critically important to their bottom lines. With the intensifying negative effects of climate change placing an unprecedented strain on our world’s water supply and quality, along with steadily increasing demand for water-intensive goods from a rising global population, companies must evaluate, manage, and mitigate their water risks in order to offer competitive returns to their investors over the long term.