How the company is assessing the water related risks in its operations

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Climate change experts have warned that parts of the world will experience water shortages in the decades to come. In December 2007, Johnson Matthey made a commitment to halve the amount of water it uses relative to sales by 2017. Now, in addition to its efforts to reduce water consumption, the company is assessing the water related risks in its direct business operations.

Water is one of Johnson Matthey's top three key resources, along with electricity and natural gas, and the company already monitors its use closely. The trigger for this risk assessment came from an internal review of material issues for Johnson Matthey and feedback obtained from its sustainability assurers, Corporate Citizenship, in their assurance of the 2010/11 Sustainability Report. Corporate Citizenship suggested that the company should carry out an assessment to understand where water shortages might occur and the potential risk to its operations in vulnerable locations around the world.

Johnson Matthey has many sales, R&D and manufacturing sites worldwide, but the manufacturing sites are responsible for 92% of its total water consumption. These manufacturing sites were selected for the assessment, covering 42 sites in 15 different countries.

The first step was to select the right tool to measure water stress in the wider geographical context. A number of tools are available and, after an evaluation, Johnson Matthey selected the World Business Council for Sustainable Development's Global Water Tool as the most suitable offering; it is fit for industrial purpose, provides comprehensive coverage and is compatible with common reporting metrics.

The next step was to apply the Global Water Tool to assess how many of Johnson Matthey's manufacturing sites are in areas of water stress, actual or potential. Water stress is defined by two respected authorities, the World Resources Institute (WRI) and the UN Food and Agriculture Organization (FAO), as a supply of less than 1,700m3 per person per annum. Johnson Matthey's water and business information was entered into the Global Water Tool and then evaluated against these models. Overall, the models showed that a large number of our manufacturing sites are located in areas of current water stress. Variations in the results reflected differences in the degree of detail and the interpretation of stress within each model.

This analysis provides important insights and flags up strategic issues. If water stress deteriorated into extreme water scarcity, could manufacturing operations be affected? What are the business risks? The exercise has highlighted which manufacturing sites are in regions of water stress and has enabled informed risk analysis.

Further work will be done on water stress and risk at site and divisional level and the analysis will help Johnson Matthey to develop policies that promote water efficiency and infrastructure improvements. In the longer term, the knowledge on water stress gained will assist risk mitigation and may be used to assist in investment decisions.

Process water recycling and rain water catchment systems are already part of Johnson Matthey's response to halving the use of this key resource. The water stress assessment complements existing work and provides the opportunity for high level strategic planning on water issues.