On World Food Day, Seven Food & Beverage Giants Commit to Publicly Disclose Global Water Risks

In Response to Investor Letter, Companies Acknowledge Need to Address Water Risks to Ensure World Food Supply Can Meet Growing Demands
Oct 16, 2015 9:00 AM ET
Press Release

October 16, 2015 /3BL Media/ - Recognizing the growing threat that water risks pose to global food supplies, more than a half-dozen major food and beverage companies, including Dr Pepper Snapple Group (DPS)Hain Celestial (HAIN), Hormel Foods Corp. (HRL), Kraft Heinz Co. (KHC), Pinnacle Foods (PF), Tyson Foods (TSN), and WhiteWave Foods (WWAV), have agreed to publicly disclose information on how they are assessing and managing those risks.

The companies’ pledges are in response to letters sent in August by a group of 60 investors collectively managing $2.6 trillion in assets urging the companies to disclose how they are analyzing and managing water risks, such as drought and increased competition for freshwater supplies in major growing regions. Specifically, the companies have agreed to report to the 2016 CDP Water Questionnaire on their water risks and strategies and progress for mitigating such risks, across their value chains and operations.

“With agricultural and other water uses under the microscope in drought-stricken regions like California and Brazil, investors want better data on how food companies are managing these risks across their global supply chains,” said Brooke Barton, senior director of water programs at Ceres, a nonprofit sustainability advocacy group. “The businesses that take this opportunity to increase transparency of their water management are sending positive signals to the financial community, well-timed for World Food Day.”

The seven companies pledging stronger disclosure were among 15 that received letters this summer from the investors, based on their relatively low water management risk scores in a recent Ceres’ report, Feeding Ourselves Thirsty: How the Food Sector is Managing Global Water Risks.  Coordinated by Ceres, with support from the Interfaith Center on Corporate Responsibility and the United Nations-supported Principles for Responsible Investment, the letter reflects investors’ growing concerns that poor water management practices, especially in areas where water supplies are limited, can lead to increased operational and commodity costs, as well as reputational risks.

Another five companies that received the letter are discussing their proposed risk assessment and response with key executives during upcoming Board meetings this fall, and have promised prompt responses to investors. Three, Monster Beverage Corporation (MNST), Flowers Food (FLO) and Fresh Del Monte Produce (FDP) have not responded at all to the letters.

“It is no question that water currently poses a large risk to business, and particularly to food and beverage companies that strongly rely on agricultural inputs,” says Carly Greenberg, ESG Analyst at Walden Asset Management, one of the signatories to the letters. “However, we at Walden Asset Management believe that advanced planning, risk measurement, transparency and overall better water management can help investors and companies alike to avoid extreme costs associated with water scarcity, pollution, or variable precipitation due to climate change.”

The companies’ statement of intent to publicly disclose additional water risk information to the 2016 CDP Water Questionnaire signals the sector’s continued progress towards transparency and prioritizing water oversight.  Launched in 2010, the CDP Water Questionnaire collects and aggregates data from companies on water risk management.

Institutional investors plan to continue pressing companies that ignored August’s “call to action” by filing shareholder resolutions and using other tactics for engagement.

About Ceres

Ceres is a nonprofit organization mobilizing business leadership on climate change, water scarcity and other global sustainability challenges. Ceres directs the Investor Network on Climate Risk (INCR), a network of more than 110 institutional investors with collective assets totaling more than $13 trillion. Ceres also directs BICEP, an advocacy coalition of 36 businesses committed to working with policy makers to pass meaningful energy and climate legislation. For more information, visit www.ceres.org or follow on Twitter @CeresNews.