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Page added on May 10, 2015
Why Food Companies Aren’t Prepared To Deal With Water Scarcity
Leading global food companies are failing to account for impending water scarcity in their business plans, a new report finds.
Released Thursday by the Boston-based sustainable business consortium Ceres, Feeding Ourselves Thirsty: How the Food Sector is Managing Global Water Risks looked at how the world’s top 37 food companies, like Coca-Cola, Cargill, and General Mills, are planning for a world with water shortages. The results, according to Brooke Barton, senior director of Ceres’ Water Program, are concerning.
“If you look at the science of groundwater depletion, climate change and the math of growing population, we’re coming to the end of cheap plentiful water,” Barton told ThinkProgress. “By and large, most companies seem to be asleep at the wheel.”
Using publicly available information — from financial and sustainability reports — the report ranked the companies based on how they use and track water, whether or not they manage water waste throughout their entire supply chain, and whether or not they had water conservation plans in place. Companies were awarded a score from 0 to 100 — and while some companies scored highly, 31 of the 37 received scores below 50. Kraft Foods, which produces brands like Jell-O, Oscar Meyer meats, Kraft cheeses, and Maxwell House coffee, received a score of a 6. Both Monster Beverage, makers of the eponymous energy drink, and Pinnacle Foods, which owns brands like Vlasic Pickles and Log Cabin syrup, received a 1, the lowest score given.
A ranking of 37 food companies water plans.
CREDIT: Ceres
“The urgency of the issues have crept up on them,” Barton said about the low scores. “The reality is that for a very long time the business model for the food sector has been premised on cheap abundant water.”
Globally, 70 percent of the world’s freshwater is used to irrigate crops or raise animals. Numerous models show that even a small rise in the global temperature could lead to dramatic reductions in available water — according to one study, a 2°C average rise in global temperature could cause one-fifth of the world to suffer from water shortages.
Currently, one-third of food production takes place in areas that are experiencing water stress — and food companies are already seeing negative impacts of producing food in a water-scarce world. Of the companies mentioned in the report, 91 percent cited water as a “material risk” in their financial filings, according to Bloomberg.
Cargill, the largest privately held corporation in the United States, reported a 12 percent drop in their fourth-quarter 2014 earnings due to drought in the Southwest, which impacted pastures used to raise beef. Unilever — which makes Hellmann’s mayonnaise — estimated that natural disasters linked to climate change, including water scarcity, costs the company $400 million annually.
Only 16 percent of companies have sustainable agricultural policies that address water resources, however.
“We believe it’s important for the investment community to understand how financially material these issues are,” Barton said. “By and large, it’s really a moment when the food sector needs to invest in agricultural productivity in the areas they source from, rather than looking to cut and run.”
Barton points to companies like General Mills or Coca-Cola as examples of food corporations that are implementing water conservation measures within their own company and throughout their supply chain. Last month, Coca-Cola cancelled plans to develop a $81 million bottling plant in North India, citing concerns over groundwater depletion. Since 2010, General Mills has partnered with outside organizations, like the World Wildlife Fund, to look at water use in their supply chain and identify areas of agricultural production most at risk of water scarcity.
“They’re working to provide Mexican growers with no-interest loans on drip irrigation equipment,” Barton said of General Mill’s commitment to water conservation throughout their entire supply chain. “They’ve decided to prioritize those regions [at risk of water scarcity] as areas that they’re going to invest in.”
The report is the first time that Ceres has benchmarked companies based on their water resource management, but Barton hopes it’s just the beginning of a larger conversation about how investors and corporations prioritize water conservation.
“We hope that the report serves as a call to action for more food companies to get involved in supporting more efficient water use in the watersheds that they depend on,” Barton said. “We want the shareholders of these companies to understand the severities of the risks that are facing the food sector.”
8 Comments on "Why Food Companies Aren’t Prepared To Deal With Water Scarcity"
Davy on Sun, 10th May 2015 6:51 am
These large food conglomerates are not going to embrace water, soil, fishery, and economic stress issues openly. They are going to avoid open discussions because there are no positives. There are only negatives that point to stock price pressure, lower growth, and increased costs. These companies are growth oriented and degrowth is not part of the business plan at least not yet.
These conglomerates have the potential to be instruments of change. We know the government is not going to address these issues in regards to necessary actions without their support. These actions are mitigation and adaptation policies that point to higher costs, lower growth, and small operations. These issues of less would open a can of worms socially.
If companies would acknowledge food productivity stagnation issues then they would be in the position of acknowledging limits of growth of the most basic of foundational resources that being food, water, and the economics of food and water. This is profound because BAU cannot degrowth. BAU must have an aura of growth, progress, and technological innovation.
These companies instead are going to acknowledge the challenges ahead with feel good marketing of actions and policies that will solve these problems. Technology, markets, and substitution actions will be cited. GMO, waste water recycling, efficiencies, and complex actions will be cited.
The reality is lower growth environment of higher priced products and shortages. This economic descent of food and water will start out in a stealth way with marketing tricks. Smaller portions and substitutions with lower value hence smaller food resources.
You cannot substitute at the bottom. You cannot grow if the bottom of the food chain is in decline. Fisheries are on the verge of collapse. Farm raised fish is even threatened by wild fishery decline that makes up its feed resource. The US western drought and the Brazil drought are an example of global water stress that is spreading.
Responsible polices for society would be promoting local permaculture responses. If these food conglomerates would promote these and other policies that are vital to mitigation of dropping production agriculture they would be acknowledging they will be smaller companies. Smaller companies mean stock price drops, earnings drop, and less dividends. These companies will avoid this as long as possible.
Their marketing will promote the usual BAUtopian hopium to maintain the BAUspell. These industry policies of denial will fall apart at some point. Reality will expose reality as it always does. This along with the reality of the oil sector will be a double whammy that the economy cannot explain away.
If food, water and energy is in decline how can BAU be in growth? It can’t and that is reality. We are right at the end point of the end of growth from 08 crisis, the end of the bumpy plateau in 2012, and now the bumpy descent likely starting 2016. This will be an overwhelming occurrence with market decline and economic tensions.
Once the descent is in progress it will be the end with no return. We are right at the top of the roller coaster run. Once this starts all hell will break lose. Where, when, how is unclear other than predictable places of non-resilience and sustainability. If you are in these locations get out or prep. These shit storm is near.
paulo1 on Sun, 10th May 2015 9:01 am
Just fed and watered our 31 broilers. We will process them in 3 more weeks, a total of a 6 week growing period. It is starting to look like it will end up costing approx. $4.00 per roasting broiler…at which my wife remarked yesterday she saw some at the store selling for $17/bird….and of course the store birds are so fatty and God only knows full of how much bacteria. Our layers produce an egg per day for each bird and are quite fun to raise. The extra eggs I do sell pays for all food. Our gardens are now in with just brocoli to set out.
It seems like most towns in western Canada now allow home chickens as long as there are no roosters. I highly recommend layers and gardening for even sub-division residents. It is healthy, rewarding, and requires little time.
GregT on Sun, 10th May 2015 9:13 am
@Paulo,
Are you processing the broilers yourselves?
penury on Sun, 10th May 2015 9:40 am
I am afraid that the problems are that most major corporations are managed by “humans”. Cognitive disconnect is rampant. As soon as everything gets back to normal; It will take at least two generations before reality is acceptable for the majority.
BobInget on Sun, 10th May 2015 1:16 pm
http://co2now.org/
What level is safe?
The upper safety limit for atmospheric CO2 is 350 parts per million (ppm). Atmospheric CO2 levels have stayed higher than 350 ppm since early 1988.
April levels exceeded 403 PPM
today’s level:
http://co2now.org/Current-CO2/CO2-Now/global-co2-board.html
(last week: 404.11)
At this rate it doesn’t matter if you quit smoking.
Apneaman on Sun, 10th May 2015 1:29 pm
Some say 320 ppm max. CO2 is not the only worry.
……………………………..
The world’s potentially catastrophic gas problem
Massive amounts of powerful methane gas under the Arctic have some scientists worried about apocalyptic results.
Jassim Mater | 10 May 2015
“As it is, though, humanity is heading straight towards the worst-case scenario with its foot on the accelerator.”
http://www.aljazeera.com/indepth/features/2015/04/worlds-deadly-gas-problem-150408100404610.html
An Gobán Saor on Sun, 10th May 2015 1:32 pm
Coca-Cola , whatever it is , food it is not.
BobInget on Sun, 10th May 2015 5:10 pm
Like Republican candidates wishing to dodge
AGW questions I’ll say right off the bat,
“Im no scientist”. I do however share
Apneaman’s methane gas, positive feed-back concerns.
What I’ve discovered. Long before all that buried permafrost gases are released, we will see early signs, some becoming evident today. Roads, structures like pipelines in
Arctic regions, collapsing over a single summer. Because of ‘delayed maintenance,’ Russian gas pipelines may go first. Losing the Alaska pipeline won’t be a huge supply loss but certainly a harbinger of worse to come.