This is the third of a four-part series taking a closer look at how 72 companies in four industries — beverage, apparel, food, and high tech — performed in Ceres’ new Valuing Water Finance Initiative Benchmark report, which assesses how companies are valuing and acting on water as a financial risk and driving the systemic changes needed to protect freshwater systems around the world.
Fresh water is increasingly in short supply, and the $6 trillion food and beverage industry is at the center of this problem.
While it’s clear that the giant industry, which uses more than 70 percent of the world’s fresh water, depends on and has an outsized impact on the world’s water supplies, what’s often less obvious is how much the industry also affects — and depends on — global ecosystems.
More food companies are working to reverse this trend by adopting measures to help preserve and restore ecosystems that support freshwater supplies they need.
Ecosystems and water risk
The economic value of water and freshwater ecosystems is immense: about $58 trillion annually, equivalent to 60 percent global GDP.
The need for water to irrigate crops may be straightforward, but most benefits or “ecosystem services” are less visible, such as filtering and storing water, enhancing soil health, storing carbon and protecting communities from floods and drought.
The relationship is circular. The amount of water the massive food and beverage industry and its suppliers use, along with the water pollution they churn out, is threatening ecosystems that need clean water to thrive, and ecosystem services that help maintain water supplies companies and communities need.
Freshwater ecosystems are also disappearing, with some being converted to farmland to meet demand for raw ingredients.
Companies and investors are becoming more aware of their critical relationship with freshwater ecosystems. That’s why some investors, through Ceres’ Valuing Water Finance Initiative, are supporting companies working to solve these challenges. These investors have laid out six Corporate Expectations, including using less water, preventing pollution and protecting ecosystems. Investors are also acting on nature-related financial risks more broadly through efforts such as Nature Action 100.
The Valuing Water Finance Initiative benchmark report assessed 72 companies, including 39 in the food industry, on how they are managing water to help mitigate financial risk. The analysis highlights the steps some food companies are taking to reduce their impacts on freshwater ecosystems and strengthen sustainability strategies that support both water resources and nature.
Sustainably sourcing ingredients
Most of the food companies evaluated in the report disclose efforts to source ingredients sustainably. This includes working with suppliers on sustainable agricultural practices that can help reduce the impacts that raising food and animals has on water resources and ecosystems.
For example, Kerry Group partners with its milk suppliers to reduce how much pollution they discharge into nearby waterbodies. This includes using nutrient management practices for the crops grown to feed dairy cows to reduce nutrient runoff.