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Corporate Water Reporting Weak

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by Yves Smith and Felix Salmon
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May 02 2007 12:00am EDT

Corporate Water Reporting: Weak

One expects hedge funds to carefully audit their use of leverage, and one expects companies in water-intensive industries such as mining to carefully audit their use of water.

And one would be wrong on both counts. In the wake of a Deloitte report saying that hedge funds are very bad at managing risk, comes a comprehensive report from Pacific Institute making similar claims about water reporting.

The report's authors looked at 139 large public companies in water-intensive industries, and found no standardization in water reporting, which makes apples-to-apples cross-company comparisons impossible. They also found precious few company water policies; very little cognisance of water risks; and almost nothing in the way of site-specific water information.

Now I'm not sure that all this information necessarily needs to reside in companies' annual reports. But it should certainly reside somewhere, and I'm pretty sure that if it's not in the annual report, that's a good sign that the company simply doesn't have the information at all.

Mari Morikawa, the lead author of the report, is quoted in the press release:

This analysis shows that companies aren’t providing risk-relevant information to investors and stakeholders. It may also indicate that some companies and sectors are failing to pay attention to their most important water risks.

Maybe better water reporting is something that socially responsible investors should start demanding from companies they invest in.

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