About 85% of water-intensive users among the JSE’s Top 100 companies are exposed to water-related risk, with 70% believing that their operations could be directly affected in the near term, a report revealed on Monday.
However, most companies still needed to identify water risk in their supply chains and give higher priority to managing their risks, the Carbon Disclosure Project’s (CDP’s) first ‘Water Disclosure South Africa Report’ highlighted.
The report argued that “when all the country’s water-related facts are considered in detail, it is difficult not to admit that South Africa is already in the grip of a water crisis”.
“Water management should increasingly be integrated into top-level decision-making. With increased awareness of the potential threat water poses to businesses, opportunities may also become available to benefit from the water crisis, particularly in companies’ supply chains,” CDP Water Disclosure account manager Karina de Souza said.
The CDP Water Disclosure project aims at providing companies an opportunity to publicly report on how they are managing water risks, leveraging opportunities and contributing to the overall management of the planet’s water resources.
The project’s lead partner, the National Business Initiative’s (NBI’s) programme manager for climate and water, Steve Nicholls, said that there was an apparent lack of planning capability and awareness at boardroom level on how water security could affect businesses.
The report indicated that up to one-third of top-level management had no oversight of the potential risks water security posed to the companies’ supply chains. Of concern was that 38% of companies indicated that they did not know how a water crisis would affect the supply chain.
Hydrology and research associate Emeritus Professor Roland Shulze pointed out that South Africa has a semiarid climate, with extreme weather conditions. Where one part of the country may experience critical water shortages, other regions may be flooding.
“Businesses should become aware of the critical role water has to play in day-to-day operations. Without water, many businesses would cease operations,” Nicholls said.
The report pointed to 92% of companies taking action to save water; however, less focus were afforded to policy formation, target setting, board oversight and establishing quantitative measurements.
“Businesses need to become more proactive in assessing and planning to identify water-related risks threatening them directly or indirectly. If one cannot measure water use effectively, one cannot manage it well,” Shulze said.
He added that South Africa’s natural water quality ranked low, and that it was deteriorating at an increasing rate.
Further, as climate change is taking effect, and temperatures rise by single degrees, the country’s water resources will come under increased pressure, owing to increased natural evaporation.
Another challenge the country had to deal with was its large number of world-class environmental and water conservation laws. He contended that little action was being taken by government to enforce them, and to proactively provide new water-related infrastructure development projects.
Of the 56 companies in the JSE Top 100 approached to disclose water use, 46% replied. This was lower than the 60% response rate from the global top 500 companies.
The Water Disclosure Report is a recent addition to the CDP. Introduced in South Africa five years ago and managed by the NBI, the CDP surveys the JSE Top 100 companies to establish their carbon emissions. As many as 83 of the 100 biggest companies on the local bourse responded to the 2011 CDP, which was the second-highest response rate among 60 countries.