Food Companies Are Severely Affected by Climate Change

A recent study reveals that climate change has significantly impacted several food companies due to some water issues. The hot temperatures registered this year, and the hellish heatwaves transform water into one of the biggest risks for the food industry. The $5 trillion industry is in danger after the analysis revealed exposure to water risks.

We all know that the severe effects of climate change triggered both extreme droughts and severe rainfall. These weather patterns did not only lead to issues around water shortages. It also increased the risk of inadequate infrastructure and insufficient water management. Relying on a recent report known as “Feeding Ourselves Thirsty” , different corporations’ response to this threat has varied.

However, a nonprofit organization called Ceres focuses on working with investors, trying to encourage sustainability initiatives for large corporations. This organization developed an analysis including 42 of the biggest food companies in the world. Furthermore, it has also looked at their water practices when it comes to packed foods, agricultural products, the meat industry and beverages.

This study represents a follow-up research from a similar one conducted in 2015. The new analysis reveals some progress in terms of transparency and reporting. Nevertheless, there is almost no progress registered in terms of proactive action. Ceres reveals that the top scoring companies are PepsiCo, Coca-Cola, Unilever, and Nestle.

Nestle has long debated the problem of water with local municipalities, trying to gain rights to bottle spring water. However, the report reveals proactive evaluation of future water risk, the disclosure of water risk exposure and the incorporation of water risks into business planning. Almost 83% of all food companies evaluated by Ceres indicate that they make certain formal risk assessment when it comes to water. Furthermore, about 75% of them also make public disclosures of water metrics, like wastewater discharge or water use.

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Many food companies suffer due to climate change-related issues

The research proved that the food companies with the lowest score were Monster Beverage, Chiquita Brands, and Pilgrim’s Pride. They have all have scored zero. This indicates that the financial risk of climate change is no longer just a theory. In 2016, a severe drought in Brazil determined the food company, Fresh Del Monte, to lose $2.5 million. Unfortunately, they were even determined to abandon some of the growing areas they have used in the country.

In the new research, this company is ranked 39 out 42, obtaining a score of 8 out of 100. Furthermore, in 2017, Coca-Cola together with PepsiCo lost over 1 million retailers in Tamil Nadu, India. This happened due to a terrible drought which affected the bottling operation. The local populations were desperately trying to find groundwater. Nevertheless, PepsiCo and Coca-Cola indicated some high scores in this analysis. PepsiCo scored 70 while Coca-Cola scored 72.

An employer in a food company

Climate change-related issues regarding water have affected numerous food companies.

Furthermore, a recent MSCI analysis regarding food companies indicates that the worldwide revenue risk from the lack of water was estimated at $459 billion. These companies needed that water for animal consumption or irrigation. Another tragic thing is that $198 billion is now at risk due to altering precipitation patterns that affect current crop production areas.

These figures indicate why corporations and funds receive more complains about water from investors. Cambria Allen, the corporate governance director for the UAW Retiree Medical Benefits Trust, indicates that more specialized investors addressed these problems five years ago. Now, more mainstream investors hare already jumped into the fray.

Droughts and rainfall affected the food production

The report developed by Ceres backs up the idea that 85% of the companies in the analysis indicates that water is a material risk when it comes to financial filings. This year, over 90% of food companies have listed water risks when discussing with investors. However, the new study also unveils that corporate board interference on water and climate has a better score in this research.

Furthermore, 12 of the 42 companies on the list made a correlation between executive pay and water efficiency goals. These are the strongest links revealed by WhiteWave Foods, Molson Coors, J.M. Smucker and Dean Foods. The Ceres research also indicates that the average company score increased by 10% compared to the study from 2015.

The study from two years ago showed that Smithfield and Nestle made the biggest improvements. Companies in charge of packed beverage and food proved to be the best performers overall. These companies registered progress when it comes to the meat industries and agriculture products.

The Ceres analysis concludes that pressure coming from both individual investors and institutional ones proved to be very effective. In this way, investors assure that massive food companies are doing their best to control their water future. Eliza Roberts is the water program manager at Ceres. She indicates that shareholder proposals regarding water rank just after climate change and deforestation.

Summing up

Climate change has affected several food companies and the food and beverage industry. The lack of water in areas annihilated by droughts caused many types of crops to die out. Hence, several food companies lost millions of dollars. When it comes to the meat industry, numerous farms might have been affected by water pollution. If poultry or livestock drank the water collected from a polluted river, they would have all been affected.

Once more, those companies in charge of meat products lost good money, trying to find other solutions to combat water pollution. In areas where weather patterns have altered, bringing tremendous rainfall, the crops all drowned. Severe floods or massive amounts of rainfall have affected farmers’ crops or even animal farms. Many food companies also use water in the process of production or processing to develop certain foods. If that source of water is contaminated, then the whole patch of food cannot be used.

The extreme temperatures affected a lot of herds of animals, forcing ranchers to move them in an area where temperatures were lower, and the air is breathable. Otherwise, all these animals could die because their body cannot adapt to heatwaves. Besides the fact that climate change affects us, as individuals, it also affects everything we need, like water and food sources.

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William E. Eubanks

I'm one of the main writers on the site; mostly dealing with environmental news and ways to live green. My goal is to educate others about this great planet, and the ways we can help to protect it.

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