Is water becoming a material business risk? GlaxoSmithKline think so

Here is their risk statement:

“Increasing levels of water stress which reduces the level of the availability of water for our operations.” [1]

Perhaps their manufacturing sites are in the desert, but this information has not been included in their annual report. However, later they announce that the water stress risk has a low risk level, but can continue up to 10 years after the balance sheet date.

This leaves the reader with the question of whether the risk is real or material for the company. If the company judge water as a risk in countries where it is abundant, they should include earthquakes as well, which of course they don’t.  If the company believes the risk is low why put it in the report at all. Only material risks need to be reported. They are neither logical nor consistent, more interested following the climate trend.

Associated British Foods are more optimistic in their 2021 Annual Report where they “recognise water as a valuable shared resource that can be scarce in some parts of the world.” Water for them is not a risk but a responsibility, where they show the world how well they recycle their water:

“Of the total water abstracted, 25% was reused within our operations before finally returning it to the watercourse.”

These companies are using fashionable marketing to state:

“We are a climate considerate company and here is the proof”.

Or perhaps these two companies believe that no-one will read this part of the report.

 [1] GlaxoSmithKline, GSK Annual Report 2021 page 50 under heading Summary of GSK’s risks and opportunities.