The Beverage industry, which faces significant reputational and license-to-operate risks associated with its water use, is the second-highest performing industry, with an average score of 43 out of 100. At the same time, there is a significant range in performance.
Only a selection of indicators are represented. See the scoring guidance here.
Areas of Strength
Seven out of the eight companies have targets to reduce water use in its direct operations, but only three (ABInBev, Diageo, Molson Coors) have targets that are more ambitious in regions of higher water risk.
Risk assessment in direct operations
Every company except Monster Beverage has undertaken some form of water risk assessment for their direct operations.
Molson Coors uses several publicly available tools, including WRI Aqueduct, to identify watersheds and facilities at greater risk. The assessment explicitly considers water availability for its breweries, the water quality impacts of breweries and access to clean water for local communities. The company discloses the facilities identified as high-risk and has partnered with NGOs, municipal water districts, industry groups and other stakeholders on projects within several of these watersheds.
Areas for Improvement
Sustainable sourcing goals
Five out of the eight companies do not have sustainable-sourcing goals for their agricultural inputs.
The Coca-Cola Company has a goal to sustainably source its priority ingredients by 2020, as defined by the company’s Sustainable Agriculture Guiding Principles (SAGP) framework. The company disclosed that more than 50% of its ingredients supply met this framework at the end of 2016.
Risk assessment of the agricultural supply chain
While every Beverage company except for Monster assesses water risks within its agricultural supply chains, these analyses could be more robust. Strong water risk assessments should cover the majority of key commodities and growing regions while also analyzing risks beyond water scarcity and pollution such as, impaired ecosystems, increased regulatory scrutiny or limited local access to water.
Diageo uses the WBCSD Global Water Tool and WRI Aqueduct to determine the number and size of its ingredient suppliers operating in water-stressed locations. The assessment requests information on water use and risk management from these suppliers, and models the impact of different warming scenarios on barley growing areas. Diageo uses the results of the assessment to prioritize its work with suppliers who are more exposed to water risks.
|Board oversight over water risk management|
|0 points||Public disclosures do not describe formal board oversight of sustainability or water risks.|
|1 point||Board or board committee has oversight over “sustainability,” “environment,” “corporate social responsibility” or other related terms, but not water specifically.|
|3 points||Board is regularly briefed by management on water risks.|
|6 points||Board is regularly briefed by management on water risks and oversight over water risks is explicitly codified in board committee charter.|
|Ties compensation of senior executives to water targets & strategy|
|0 points||Public disclosures do not identify any relationship between water or sustainability performance and the compensation of senior executives.|
|3 points||Water is tied to executive compensation implicitly (e.g., through a sustainability or climate target).|
|6 points||Water is tied to executive compensation explicitly.|
|Assesses water risks in direct operations|
|0 points||Public disclosures do not describe a process by which the company identifies whether its owned operations are in high-risk watersheds.|
|2 points||Company uses third-party tools or data sets (or equivalent internal tools) to identify facilities located in watersheds identified as water-stressed (inclusive of water scarcity & quality).|
|4 points||Analysis identifies facilities in watersheds facing a broader set of risk factors such as impaired ecosystems, greater regulatory scrutiny or limited local access to water.|
|Assesses water risks in agricultural supply chain|
|0 points||Public disclosures do not describe a process by which the company identifies whether its agricultural inputs are sourced from high-risk watersheds.|
|2 points||Company uses third-party tools or data sets (or equivalent internal tools) to identify agricultural inputs or sourcing regions in high-risk watersheds (accounting for water scarcity and water quality).|
|5 points||Analysis identifies inputs and sourcing in watersheds facing a broader set of risk factors such as impaired ecosystems, greater regulatory scrutiny or limited local access to water.|
|Has time-bound sustainable-sourcing goals for key commodities|
|Goals were assessed against the following criteria: Impact orientation, quantification, commodity breadth and commodity depth (see detailed criteria here).|
|Provides financial incentives to farmers to adopt agricultural practices to reduce water impacts|
|0 points||Public disclosures do not describe any provision or financial incentives to encourage more sustainable production.|
|2 points||Provides direct financial incentives to producers to encourage adoption of practices that reduce impacts and dependence on water for some agricultural suppliers.|
|4 points||Provides direct financial incentives to producers to encourage adoption of practices that reduce impacts and dependence on water for at least 50% of agricultural suppliers.|