- 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 nonprofit Ceres. In Feeding Ourselves Thirsty, the group 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 score out of a total possible of 100 was 45.
- A few companies scored relatively high in the ranking, however. Coca-Cola received the highest score of 90, followed by Unilever and AB InBev, which both scored an 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 analyzed in the Ceres report currently have a water reduction goal for their agricultural supply chains, and only Hormel has implemented a risk assessment process, the report said. 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,” said Kirsten James, director of water for Ceres at a presentation last week.
Consumption of meat and animal products accounts for 27% of the world's total water footprint, according to sustainability nonprofit FoodPrint, with the largest use of it being for 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.
At the presentation, Coca-Cola Vice President of Sustainability Michael Goltzman discussed how the beverage giant is approaching water reduction, noting it was the first major beverage company to replenish more water than it uses in 2020. He said the company is working to reduce its consumption through regenerative water use, along with working to invest in improving the watersheds it sources from.
“We also focus and prioritize watersheds where we operate and source agricultural ingredients using global water risk and source vulnerability assessments,” Goltzman said.
Commitments from companies to source their agricultural products sustainably was another area of improvement. Nearly seven in 10 now have a commitment, up from 41% in 2015. One example is ingredients giant Ingredion, which has sustainably sourced more than 2.1 million metric tons of crops. However, the Ceres report detailed how one third of companies still lack any commitments, specifically ones that have a set target date. CPG companies without a commitment include Brown Forman, Constellation Brands, Monster Beverage Corp., J.M. Smucker and Conagra, according to Ceres.
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 and Archer Daniels Midland had linked their water strategy to pay incentives.
Watershed protection plans, the report stated, was another area of improvement, with 42% of companies having one, compared to none in 2015. The report specifically highlighted Cargill for investing in protecting watersheds such as the Mississippi River Basin.
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."