- The food industry, which uses over 70% of the world’s freshwater supply, is largely not ready for future shortages, according to a new report by the sustainability nonprofit Ceres. In Feeding Thirsty, the group assessed the water scarcity strategies of 38 food and beverage companies based on their corporate governance and oversight, risk assessment, reduction targets and financial support to producers. The average score out of a possible 100 was 45.
- A however, few companies scored relatively high in the ranking. Coca-Cola received the highest score of 90, followed by Unilever and AB InBev, both of which scored 83. Some of the lowest-rated companies were meat suppliers, including JBS, Perdue, Sanderson Farms and Pilgrim’s Pride, all of which scored below 12. Ceres said agricultural supply chains need to be improved as they use a lot of water to feed crops and livestock.
- While 71% of companies factor water risks into their business planning and investment decisions – up 13 points from 2019 – many are not prioritizing the issue, Ceres noted. This is essential, as the demand for water is expected to increase by 20-30% by 2050, according to a United Nations projection cited in the report.
Within the food industry, certain types of businesses face an increased need to manage water-related risks.
None of the meat processors analyzed in the Ceres report currently have a water reduction target for their agricultural supply chains, and only Hormel has a risk assessment process in place, according to the report. Ceres stressed that it is crucial for these actors to do so because of the unique risks they pose to the water supply.
“Agriculture drains aquifers in many parts of the world and meat production is one of the biggest polluters of watersheds in the world, due to runoff of fertilizers and other chemicals and mismanagement. manure, ”Kirsten James, water director for Ceres said in a presentation last week.
The consumption of meat and animal products represents 27% of the total water footprint in the world, according to sustainability nonprofit FoodPrint, the greatest use of which is in the production of animal feed.
Coca-Cola’s strong performance on the water was highlighted by Ceres during a presentation last week. In the report, the company’s water reduction targets and risk assessment analysis were listed as the main reasons for its high score.
During the presentation, Coca-Cola Vice President of Sustainability Michael Goltzman explained how the beverage giant is tackling reducing water consumption, noting that it was the first major company to drinks replenish more water than it consumes in 2020. He said the company is working to reduce its consumption through the use of regenerative water, while working to invest in improving the watersheds from which it sources.
“We also focus and prioritize the watersheds where we operate and source agricultural ingredients using global water risk and source vulnerability assessments,” Goltzman said.
Another area for improvement was the commitment of companies to source agricultural products sustainably. Almost seven out of ten now have a commitment, compared to 41% in 2015. For example, the ingredients giant Ingredion, which has sustainable source of more than 2.1 million metric tonnes of crops. However, the Ceres report detailed how a third of companies still have no commitments, especially those with a set target date. Non-binding GIC companies include Brown Forman, Constellation Brands, Monster Beverage Corp., JM Smucker and Conagra, according to Ceres.
Another area for improvement is the link between executive compensation and water and sustainability targets: 53% of food industry companies make this link, an increase of 20 percentage points from to 2019. However, among the agricultural companies reviewed by Ceres, only Del Monte and Archer Daniels Midland had tied their water strategy to financial incentives.
Watershed protection plans are another area for improvement, according to the report, with 42% of companies having one, up from none in 2015. The report specifically pointed out that Cargill has invested in protecting watersheds such as the Mississippi River Basin.
Ceres called on investors in food companies to engage directly with company executives and ensure the extent of water-related risks are properly addressed, saying “these findings can support efforts to management to change the practices and policies of the company ”.