Dry spell: The drought continues despite good rains and the levels of the Orange River have dropped.  Miners and food and beverage companies are among the top consumers in the country. Picture: DAILY DISPATCH
Dry spell: The drought continues despite good rains and the levels of the Orange River have dropped. Miners and food and beverage companies are among the top consumers in the country. Picture: DAILY DISPATCH

One of the worst droughts in living memory could see an improvement in the dismal level of reporting on water consumption by JSE-listed companies.

At present, only one-third of listed companies provide shareholders with details of their water consumption. This despite the fact severe water restrictions have been experienced or are being contemplated across the country.

Michael Rea, who compiles a detailed analysis of listed companies’ reporting on environmental, social and governance issues, says the poor levels of disclosure are worrying given the materiality of the issue. Access to reliable energy and water has been identified as the 11th most material issue facing listed companies in SA.

"Consider how many companies had to install bulk water storage infrastructure to manage ‘flow shedding’ at their operations in places like the north coast of Durban, costing in one case more than R500,000 a month for a hotel to stock up when the municipality couldn’t turn on the pipes," said Rea.

According to the nonprofit group Carbon Disclosure Programme, water supply disruptions to its mines cost African Rainbow Minerals $26m in lost revenues in 2015, over a third of annual income for that year.

Rea’s latest Integrated Reporting and Assurance Services (IRAS) review reveals that only 108 of the 311 companies assessed reported water consumption data, up only slightly on the 106 that provided data in the previous year.

"Despite the litany of evidence suggesting we’re heading for a major water crisis in the not-too-distant future, only 36 of the 311 companies reviewed reported a target for reducing water consumption ."

David Couldridge, head of ESG engagement at Investec Asset Management, agrees that although water scarcity tends to be a regional issue at any one time, it is a general problem that is not going to go away. "Unlike our recent energy problems, there is no working around water shortages." Improved disclosure is needed and companies will have to work together to tackle the issue.

While mining companies are the largest absolute consumers of water, IRAS’ ratings are based on water consumption per person hours worked. On this basis, mining companies remained at the top of the list, but food and beverage companies also featured strongly.

Tongaat Hulett, RCL Foods and Sovereign Foods were among the top 10 consumers. SABMiller would probably have featured if it had not been excluded from the IRAS review in 2016 because of the takeover by Anheuser-Busch InBev.

While it is tempting to slam these companies for their high water consumption, Rea suggests of much greater concern are the companies that are not disclosing consumption details. "At least those that do disclose are aware there is an issue."

The majority of companies that have disclosed details have also stated their objective is to reduce water consumption.

SAB’s Newlands-based brewery in Cape Town, located in a province facing steep water restrictions, is the best-performing brewery on the continent in terms of water consumption.

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