Focus on water issues

Water is a natural resource that is already scarce in many places and for which demand is expected to increase in the future.

Article from 2018 annual report

Water shortages are a result of, among other things, increased global population and climate change. It is therefore necessary to ensure access to good quality fresh water.

Agriculture is the biggest user of fresh water from the world’s lakes, rivers and groundwater. Roughly 70 percent of the world’s fresh water consumption relates to irrigation in agriculture, over 20 percent is used by industries and the rest goes to household use. Most of the water used in agriculture comes directly from rain and not from irrigation. Globally, 60 percent of all cereal crops are completely dependent on rain, while 40 percent are wholly or partially dependent on irrigation.

Warmer climate, changing weather patterns and increased populations set new demands

Fresh water is a local asset, which is expensive to transport. Warmer climate, changing weather patterns and increased population put pressure on local water resources and require better water management. Traditionally, companies in the agricultural sector have focused actions on the direct water consumption in their operations. A small number of companies have also worked to understand and manage risks throughout their subcontractor chains. Given the challenge, a holistic approach is required to understand the risks and opportunities of managing the company’s direct and indirect fresh water supply.

Investor collaboration for better management of fresh water

An investor collaboration through the Principles for Responsible Investment (PRI) has for several years worked to get a better understanding of companies’ preparedness and management of water. The investor collaboration has also worked for increased dialogue between companies and investors on water issues.

During 2018, the Council participated in the second phase of the investor collaboration project, which focuses on initiating dialogue with non–responding companies from the first phase. The Council is responsible for contact with two companies and has started dialogues where water issues have been discussed. The Council will continue the dialogue work in 2019.