Embargoed until 12:01 Dec. 8
Water scarcity poses a grave threat to consumer staples, including packaged meat, according to the sustainability nonprofit Ceres.
In a new report, it estimates the total risk at $200 billion. Ceres found the packaged meat sector, in particular, is also potentially exposed to “much higher-than-expected potential losses” because the scarcity risk calculations leave out the negative impacts that these companies can have on water resources. Those, too, contribute to companies’ overall vulnerability.
The report “Financial Implications of Addressing Water-Related Externalities in the Packaged Meat Industry” specifically calculates the water risk for meat giants BRF, Hormel Foods and Tyson Foods. It says the companies face a choice of investing in their water risk now or paying dearly down the line for not doing so. The water impacts that the report considers include nutrient runoff from crop fields and manure, ag land irrigation, drinking water for livestock, and water use and wastewater discharge from processing and packaging.
The math comes to an estimated need for the companies to invest $57 million (BRF), $63 million (Hormel) and $301 million (Tyson) to eliminate “impacts on freshwater from nutrient runoff and water withdrawals.” For the Brazilian company BRF, most of that cost comes from nutrient runoff impacts, while for Tyson and Hormel the costs are closely divided between nutrient runoff and water use.
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“This is a relatively low price tag,” the report says. The companies that invest now “are likely to benefit from greater investor trust and confidence that the company is committed to protecting its social and legal license to operate.” The benefits beyond investor confidence, the report says, include reducing price volatility, preventing raw materials supply disruptions and positioning the company to remain competitive as alternative protein sources emerge that need less water.
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