The CDP releases the 2013 South African Water Report

Submitted by: Nadia Shah, Monday, March 31, 2014

<p>The CDP Water Report’s cover image emphasises the need for all South Africans to save water (Image Source: CDP Report)</p>

The CDP Water Report’s cover image emphasises the need for all South Africans to save water (Image Source: CDP Report)

86 % of South African companies are experiencing substantive water related risks. This is according to the latest water report released by the CDP in partnership with the National Business Initiative (NBI). The report is based on information disclosed on water related risks and opportunities by 33 of South Africa’s top JSE listed companies.

Response rate

In 2013 56% or 33 out of 59 companies invited to participate responded to CDP’s water program compared to the previous year’s 49%. Joanne Yawitch, CEO of the NBI raised concern over the poor response rate in the foreword stating, “While an improved response rate to 56% indicates progress, it means that nearly half of a sample of companies specifically selected because of their relationship with water are not responding.”

In comparison the CDP’s climate change program received a response rate of 83%. According to Steve Nicholls, NBI Program Manager of Climate Change and Water, “Water risks appear to be more severe and more immediate than climate change. In South Africa the risks posed by sufficient supply of good quality water and at the same time protecting business from too much water during more frequent peak storms are probably greater than the risks posed by climate change”. Nicholls attributes the comparatively lower response rate to the fact that water receives less media, consumer and investor attention and therefore companies are less mature in their understanding of water risk and opportunity.

South African businesses face comparatively higher risks

72% of South African businesses have experienced water related impacts in the last five years, compared with 53% of respondents in the Global 500 survey. Water stress and scarcity continue to be the most significant risk followed by declining water quality, flooding and high water prices. Nicholls warned, “With over 80% of respondents reporting that the majority of their operations are in regions at risk, you would be foolish to think your supply chains are immune to water risk, even if you think your company is free of direct impacts.”

The report indicated a decline in the understanding of supply chain water risks as 28% of respondents were unable to identify if their supply chain is at risk, compared to 21% in 2012. “Water is difficult to understand,” said Nicholls, “It has both a local impact on your operations but also a global impact on your supply chains. It is also complicated to measure and to price. Water is priced based on the cost to extract it rather than on its value. So if you are in a water catchment that is water scarce that water is theoretically more valuable to you – however its price is the same as if you were in an area well supplied with water.  The risk is therefore less directly measurable.”

Positive findings

The report highlights progress on a number of issues. 83% of South Africa’s top companies now have a water strategy or policy in place, this is a steady increase from the 75% reported in 2012.

In addition uring 2013, the responding companies undertook a total of 104 specific initiatives that are currently being implemented. The majority (53%) related to their direct operations, 19% on community engagement issues, 9% to public policy and transparency, 6% to their supply chain and 5% to watershed management. According to the report, it is encouraging to note the consideration given to community engagement and that some businesses have established effective partnerships with national and local government.

The business sectors’ concerns relating to the state of water infrastructure in the country has spurred significant investments by reporting businesses in water infrastructure in 2013.  Nicholls advised, “Businesses should be thinking very carefully about how the management of water and the need for increased spending on water treatment and provision will impact the cost of water – and therefore inflationary pressure on both their cost to provide goods and services and the disposable income of their consumer.”

The CDP emphasises the need for collective action for water resource management that goes beyond their operations. Nicholls has found that many South African companies have risen to the challenge, “The theme that has emerged more and more each year, which excites me most, is the willingness of companies to cooperate with competitors, other businesses, government and civil society to solve particular water challenges,” he said.  “Water is after all a public good that faces some significant, interconnected challenges.  We are not going to solve South Africa’s water challenges by working in silos and I am inspired by many of the companies who reported pioneering collaborative activities”.

Interesting Facts from the Report:

  • The British American Tobacco company uses 3,77 cubic metres (tonnes) of water per a million cigarettes produced.
  • SABMiller uses 3.7 hectolitres of water per a hectolitre of lager.
  • 72% of Anglo American’s water needs were met by reused or recycled water
  • In 2012, Mondi PLC used 306.7 million cubic meters (tonnes) of water.
  • Illovo Sugar reported R3 million worth of damage due to floods in December 2012

The CDP South Africa Water Report 2013 can be accessed via the NBI website. 

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