Risk factors explained

Water scarcity & use

Water availability is an increasingly significant risk to intensive farming companies.

Key stats

63
%
of Index companies were ranked as ‘high risk’ on this category.
82
%
of Index companies showed no evidence of an enforceable supplier code regarding water use management.
Top
Hormel, a pork, poultry and beef processor, Fonterra, a New Zealand-based dairy company and Grupo Nutresa Corp, a Colombian food processor, were the top performing companies in this category.

Water availability is an increasingly significant risk to intensive farming companies as they require large amounts of water both directly and for feed. Beef’s water footprint, for example, is six times that of pulses on a per gram of protein basis.  Despite this risk, the animal protein sector has a poor record on water management, with the meat industry ranked as the lowest performing industry compared to sector peers in a recent benchmark by non-profit organisation Ceres.

Several Index companies do report on this issue however. For example, Thai producer Charoen Pokphand Foods reported that 38% of its production sites in Thailand are located in water-stressed areas, representing 59% of its total cost of goods sold. Similarly, dairy giant Fonterra reported that its management of on-farm support for farmers and operational water efficiency activities requires over $1 million per year.

Other findings in this category:

  • Only 10 companies (17%) achieved a ‘low risk’ ranking for management of water risks.
  • 35% of Index companies report on water use, and show evidence of a clear water management plan.
  • Aquaculture companies received the highest average scores on this risk factor, the top performers include several pork and poultry producers.
  • No company scored 100%. This is primarily because very few companies are addressing water use issues at the feed level.
  • The average score of companies with beef and dairy portfolios – the most water-intensive proteins – was 36 out of 100. While 58% of beef and dairy companies, mostly Asian-based, were assessed as being ‘high-risk’ on this risk factor.

*Companies with ‘multiple’ proteins derive significant revenues from more than one protein source.