Packaged food and beverage companies are taking the lead when it comes to managing water risks to the supply chain while their counterparts in the meat and agricultural products sector are lagging behind, according to a new report.
Feeding Ourselves Thirsty, a report from sustainability charity Ceres, benchmarked 37 food sector companies based on four categories of water risk management.
The first category is overall corporate governance and management of water risk. The last three categories are actions to reduce water risks and their impact on direct operations, the manufacturing supply chain, and the agricultural supply chain respectively.
The top-rated performer overall was packaged food company Unilever, which scored 70 out of 100 points. Coca-Cola was the best performing beverage company with 67 points. But even the highest-performing agricultural products company, Bunge and meat products business, Smithfield Foods, scored only 29 and 33 points respectively.
The report is prompted by fears that climate change and water overuse mean in many places low-cost, plentiful water supplies are at risk.
“This shift increases the risk of financial impacts to food companies, including disruption of operations, more expensive agricultural inputs and constraints on growth due to water shortages and loss of social license to operate,” the report said.
Although many firms identified water risk as a priority this often failed to translate into action, it said. Only 30 per cent of benchmarked companies considered water risks a part of their major business planning activities and investment decision-making.
And while most companies have begun to evaluate water risks in their direct operations, two-thirds were still not evaluating water issues in their agricultural supply chains, where the risk is greater.
Five of the six companies that scored more than 50 points overall were in the packaged food sector: Unilever, Nestlé, General Mills, PepsiCo and Kellogg's. However low-scoring companies were spread throughout various sectors.
These included drinks company Monster Beverage (one point), agricultural companies Fresh Del Monte and Ingredion (seven and five points respectively) and meat companies Tyson Foods and Pilgrim’s Pride (eight and three points respectively). Packaged foods companies Kraft, Flowers Foods and Pinnacle Foods scored six, five and one point respectively.
Only two companies – Coca-Cola and Nestlé – reported goals to reduce wastewater discharge and improve water quality beyond existing mandatory legal requirements.
Only six companies have sustainable agriculture policies that address water issues, while four – Coca-Cola, General Mills, Kellogg's and Unilever – have set goals to source the majority of their agricultural inputs from farmers using responsible water practices within a specific time period.