The food industry, which uses over 70% of the world’s freshwater supply, is largely unready for future shortages, according to a new report by sustainability non-profit Ceres. The report graded the water scarcity strategies of 38 food and beverage companies on their governance and corporate oversight, risk assessment, reduction targets and financial support for growers. The average scores out of a total possible of 100 was 45.
A few companies scored relatively high in the ranking, but Coca-Cola received the highest score of 90, followed by Unilever, which both scored 83. Some of the lowest scoring companies were meat providers including JBS, Perdue, Sanderson Farms and Pilgrim’s Pride, which all scored under 12. Ceres pointed to agricultural supply chains as a key area in need of improvement, as they take up so much water to nourish crops and livestock.
While 71% of companies consider water risks in their business planning and investment decisions—up 13 points from 2019—many are not prioritizing the issue, Ceres found. This is critical, as demand for water is expected to increase by 20% to 30% by 2050, according to a United Nations projection cited in the report.
Within the food industry, some types of companies face a greater need to address water risks.
None of the meat processors analysed in the Ceres report currently have a water reduction goal for their agricultural supply chains. Ceres stressed that it is crucial for these players to do so because of the unique risks they pose to the water supply.
Agriculture is draining aquifers in many regions of the world and meat production is one of the biggest polluters of watersheds globally, due to the runoff from fertilizers and other chemicals and poor manure management.
Consumption of meat and animal products accounts for 27% of the world’s total water footprint, with the largest use of it being for the production of animal feed.
Coca-Cola’s strong performance on water was highlighted by Ceres at a presentation last week. In the report, the company’s water reduction targets and risk assessment analysis were listed as primary reasons for its high score.
Another area of improvement is linking executive compensation to water and sustainability goals: 53% of food industry companies make this connection, an increase of 20 percentage points from 2019. However, of the agricultural companies reviewed by Ceres, only Del Monte has linked their water strategy to pay incentives.
Watershed protection plans, the report stated, were another area of improvement, with 42% of companies having one, compared to none in 2015. Ceres called on food company investors to engage directly with corporate leadership and ensure that the breadth of water risks are properly addressed, saying that “these findings can support stewardship efforts to change corporate practices and policies.