Most Indian companies risk being left high and dry if they don't urgently draw up policies to cope with the shrinking availability and pollution of water.
“Of the 500 publicly held companies in India, only 30 per cent companies reported that they had a company-level policy for prudent water usage and 22 per cent said they had policies to manage waste-water discharge,” a recent Crisil Research study said.
In fact, industry, the largest user of water after agriculture, is far from playing a responsible role in conserving this scarce natural resource. Only a few companies, such as ITC and Tata Motors, are taking proactive measures, the study said.
According to the study, ‘Bracing for a Crisis', only 3.3 per cent companies disclosed information on water used and merely 1.5 per cent reported the source from where water is drawn. Energy, materials and utilities are the sectors that were more open on waste-water discharge.
“Most companies continue to have a cavalier approach towards use of water or waste-water discharge. Consequently, they have been forced to face physical, regulatory and reputational damages, often leading to significant impact on financial performance,” said Mr Mukesh Agarwal, Senior Director, Crisil Research.
The study cited the case of physical risks faced by the knitwear hub of Tirupur in Tamil Nadu.
Because of a court order, all dyeing units have been closed down as they were polluting water sources. As a result, the industry is is expecting a loss of Rs 3,500 crore in 2011-12. The dyeing units employ about 50,000-60,000 people directly and around 6 lakh indirectly.
Coca-Cola is an example of reputational risk. The soft-drink major's brand image took a hit after the controversy over water drawn by its bottling plant in Plachimada in Kerala impacting health and environment in the area. “The public perception that Coca-Cola was responsible resulted in legal fees, lost sales, damage to its brand and closure of plant in 2004,” it said.
In fact, water management also makes good business sense, as investors have started seeking water-related disclosures from companies, the study added.