This year, the World Economic Forum ranked water crises as the global risk of highest concern to society in the next ten years. The availability of water is impacted by rising competition, aging water infrastructure, weak regulation, and climate change. The food sector, which uses 70 percent of the world’s freshwater, is further exposed to water risks by increased pollution. 
So, Friends Fiduciary, along with more than 60 leading North American and European institutional investors collectively managing $2.6 trillion in assets, sent letters to food sector companies to raise awareness of water crises. The companies receiving the letters were identified as poor performers based on a recent Ceres report entitled, Feeding Ourselves Thirsty. The report analyzed food sector companies in four categories of water risk management and rated them on a 100-point scale. In addition to raising awareness, the letters urged companies to set and implement systems to collect and interpret data on the company’s exposure to water risks within both its direct operations and supply chains. The adverse affects of water scarcity and water pollution increasingly are impacting operating and financial results. Limited freshwater supplies can lead to rationing. Production interruptions can increase operating costs. Increased competition can drive water rate hikes. Public resistance to corporate use of scarce groundwater supplies can result in reputational risks. CDP, known for their surveys on sustainability, developed a water questionnaire to collect material data on how companies identify, manage, and mitigate risks and opportunities to water. The letter encouraged companies to respond to the water questionnaire and use it as a framework for effective reporting and action. “Many food sector executives are holding onto a mistaken view that water will forever be cheap and limitless,” said Brooke Barton, co-author of Feeding Ourselves Thirsty. “But the era of cheap, plentiful water is coming to an end, and, more than ever, food companies need to address it.” FFC believes water resources can be used more efficiently and managed more effectively to help ensure the right to water for future generations. We would like to see companies, especially those in the food sector, implement standard procedures to identify and mitigate water risks, better manage their use of freshwater, and regularly report to investors their approach to water stewardship. FFC signed onto those letters going to the food and beverage companies (DPS, FDP, HRL, KHC, & MNST) held by Friends Fiduciary.
