Business case for corporate water disclosure

1. Business case for corporate water disclosure • Damandeep Singh • Director, CDP India • Damandeep.Singh@cdp.net

2. #2014 yr CC closed #Everest & #El Nino Paradox– Elixir of life, but it can also be a life destroyer: bacteria, flashfloods, drought, tsunami, Greatest killer– yet a fifth of humankind still lacks easy access to potable water Natural disaster– Uttarakhandflashflood, Fukushima disaster, which triggered a triple nuclear meltdown • India, power demand & risk to FMCG co • Bottled water is some places is already more expensive than crude oil on the spot market California Droughts & water wars in Egypt; • News reports state that San Fransisco became the first city to ban bottled water • Businesses being shut down or threatened, Coca Cola in UP, IndiaBullspowerplant in MH, IPL • Prof Brahma Chellaney is a geostrategist and the author, most recently, of “Water, Peace, and War”

3. Water is a critical business issue Physical – Unclean water is the greatest killer on the globe, yet a fifth of humankind still lacks easy access to potable water; Regulatory – delaying or suspending operational permits; and Reputational – mishandling water related issues alienating customers, suppliers or investors. • Water will have more rapid and unavoidable consequences for some businesses than carbon • Businesses are recognizing that the real value of water is not adequately reflected in its cost, but resides in securing licenses to operate, business continuity and protecting brand value • 65%of Global 500 companies report water-related risks to impact now or in the next 5 years

4. Population tripled in 50 years. Only 4% of world’s water catering to 17% of population Add rapid industrialisation, expanding agriculture & urbanisation = immense pressure on natural resources Already water-stressed, estimated to be water-scarce by 2020. Demand to outstrip supply by 50% by 2030 Increased frequency and severity of extreme weather events along with droughts and floods make water security and distribution even more difficult and costly. The water challenge in India

5. The water challenge in India 2 Innovation Potential Solar water pumps -- Tremendous scope, some estimates put it at 26 million Tensiometer-- a tool used to measure the moisture content of the soil System of Rice (or root) Intensification (SRI) in Bihar and other areas • India’s resource problems are not those of scarcity, but rather of inefficient use & policies • Foodgrains irrigated with groundwater that requires millions of inefficient electricity-consuming pumps • Inefficient power plants and other heavy industry like steel which use anything from 4 to 8 times the global standard of water use per unit of production • Paradigm shift in the 12th Plan

6. Water is already halting business A total of c6GW of coal-based generation capacity faced closure in 2011 and c1.5GW in 2012. The most severe black-out faced by the country in 2012 was attributed to water supply shortages. 53% Companies that have already suffered detrimental impacts from water 40% increase from 2011

7. Increasing stakeholder expectations  • Corporate disclosure of water-related risk is seriously inadequate …The financial impact of water shortages on sectors and companies is unclear, because information on water use data and impacts is spotty and partial.  • - JPMorgan, Watching Water • Investors considering shareholder resolutionsor even divestment from companies that they perceive to be managing water issues poorly. • Water risks can manifest not just in company’s own operations but across the entire value chain, which can expose investors to significant risks. • Increasingly institutional investors & buyers are calling for transparent & comparable disclosure of water related information.

8. Increasing stakeholder expectations  • It is extremely important to reduce the water footprint of Indian industry, both in terms of fresh water used, as also polluted wastewater released untreated into the environment. The urgency of this issue is because water conflicts are increasingly arising across the length and breadth of India between competing users and uses. And industry, as a relatively new user of water, needs to recognize that economizing on the use of water is now an essential ingredient in ensuring sustainability of its operations and may be in its own enlightened self-interest. •  • - Dr. Mihir Shah, Planning Commission India • Investors requesting companies to submit water data through CDP’s water program quadrupled in just four years. In 2014, 573 investors representing US$60 trillion in assets, & major MNCs including Unilever, Pfizer Dell, L’Oreal, will ask >1,800 companies to provide business critical water-related information and water stewardship efforts through CDP’s global, standardised water disclosure system.

9. Key findings from Indian disclosures In 2013, 29 Indian companies comprising of large, medium and small scale industries, demonstrated real leadership on this issue by engaging with CDP to report their water stewardship efforts to their investors and customers.

10. More than half of Indian respondents (55%) consider themselves exposed to water-related risks that have the potential to change their business operation, revenue or expenditure, or are uncertain about it. A third (31%) of respondents reported that they have operations in water-stressed regions of which almost half have majority of their operations in such regions. 1) Water crisis is viewed by Indian businesses as serious and immediate  • Competing water demand may generate conflict amongst shared water users. Tata Chemicals  • Declining water quality poses a substantive risk to its to our agri-business in terms of the quality of raw materials available for conversion into finished product. • ITC

11. Types of water-related risks reported by Indian companies

12. 2) Most companies have water-related data for direct operations Companies able to provide data on water withdrawal Companies able to provide data on water recycled/reused

13. Majority are able to identify whether their operations are located in water stressed regions (86%) and if their key inputs or raw materials come from regions subject to water-related risks (76%). 55% have a water policy, strategy or management plan in place. For Global 500 companies the figure is 92%. Moreover, only about half of these policies include concrete quantitative goals or targets for water resource management. 3) Aware of stress but actions at a corporate level are inadequate

14. A third of respondents are unaware of the risks they might be exposed to in their supply chain. But, only 24% of the respondents are currently requesting their suppliers to report on their water use, risk & management. 60% of the companies analysing water related risks are doing so only at facility or business unit level. Similarly, 56% of all the water-related goals and targets are focused on direct operations. 4) More focus needed on water related issues outside organisational boundaries  • We have identified that water is a key component in our supply chain and as a risk management strategy, conduct awareness sessions on water conservation measures during our stakeholder meetings. L&T

15. Perceptions of strategic opportunities arising out of the water crises vary across cost savings, increased brand value, sales of new products or services and other business opportunities, including water conservation, recycling and reuse of wastewater. However, the most commonly cited opportunity relates to cost savings followed by general reputational benefits. 5) Water also presents business opportunities  • We foresee substantial cost savings through the implementation of integrated watershed development programmes in the community.  • ITC

16. The solution Transform the global economic system to prevent dangerous climate change and value our natural resources by putting relevant information at the heart of business, investment and policy decisions.

17. Investors Corporations How does CDP work? Information Authority Information Authority

18. Disclosure is good for business

19. Water 2014 573investor signatories US$60trillion in assets

20. Questionnaire sent to 1036 companies in 2013 • Targeted industry sectors include: • Apparel • Chemicals • Food & beverage • Metals & mining • Oil & gas • Pharmaceuticals • Power generation • Semiconductors Global 500 S&P 500 Companies outside these sectors and regions are welcome to respond voluntarily; to register email respond@cdp.net JSE 100 ASX 100

21. 2014 water questionnaire Five modules Current state (Context) Risk assessment (Procedures and requirements) Implications (Water risks & Water opportunities) Accounting (Water accounting) Response (Governance & Strategy, Compliance, Targets and initiatives) Scoring: in 2014 we will pilot water scoring on a private basis with Global 500 respondents, participating organizations from CDP’s Water Reporter Services, Water in Supply Chain program and corporate endorsers of the CEO Water Mandate

22. Supply Chain: water data in 2013 • Supply chain collected information on water from suppliers for the first time in 2013 • Over 400 suppliers were invited to participate • Founding Members:  Allergan’s response to CDP Water Disclosure has facilitated company-wide dialogue to drive continuously strong target-setting for water use. Allergan has now developed a ten-year vision to reduce water consumption by 50% across all of its operations by 2020 - Allergan

23. Most credible rating organization Each year GlobeScan and SustainAbility conduct a survey of thousands of stakeholders that include leading sustainable development experts and practitioners from corporate, government, NGO, academic and service sectors.CDP was very pleased that it’s scoring was rated number 1 for most credible rating.

24. CDP data used in sustainability indices MarkitCarbon Disclosure Leadership index FTSE CDP Carbon Strategy Index BNEF Global Corporate Renewable Energy Index Dow Jones Sustainability Index (DJSI) FTSE4Good Index Ned Bank Green Index S&P BSE Carbon Index Korea Exchange – KRX SRI Index Istanbul Stock Exchange Sustainability Index S&P/IFC Carbon Efficient Index

25. More Information

26. Sincere Thanks to.. Exhibit: 6-8 May, 2014 PragatiMaidan, New Delhi

27. Damandeep.Singh@cdp.net • www.cdp.net