Supply chains are a major contributor to the environmental footprint of multinational companies, particularly in their use of water. By working with suppliers to decrease water-related risk, large companies can help reduce pressure on the world’s over-stretched water resources.
In July 2012, global food service retailer McDonald’s added a question to the Environmental Scorecard it distributes to its top suppliers. The addition requested that suppliers determine the water stress associated with their facilities’ locations. WRI played a pivotal role in this landmark initiative, providing the Aqueduct water risk mapping tool, which McDonald’s asked its suppliers to use when calculating their water footprints.
Measuring Water Risks
McDonald’s distributes an annual Environmental Scorecard Questionnaire to its top suppliers. The suppliers asked to respond to the water risk question include providers of beef, poultry, pork, potatoes, bakery products, and toys. Incorporating this question into the Environmental Scorecard was an important step in advancing McDonald’s dialogue with its suppliers beyond efficiency to include water risk and overall water stewardship.
The 2012 Environmental Scorecard directed suppliers to, “Use the WRI Aqueduct Tool to determine the water stress of the facility’s location and provide the water stress [level] of the facility’s location.” McDonald’s also urged its top suppliers to use the data they acquire from using Aqueduct to update their environmental management processes to take water risk into account. By the end of September 2012, all 353 of the facilities asked to complete the Aqueduct water risk assessment had done so.
This McDonald’s initiative provides an important precedent for evaluating water-related risk among agricultural producers, who account for 70 percent of water use worldwide.
Making Change Happen: WRI’s Role
WRI’s Aqueduct tool, developed by our Markets & Enterprise Program, allows companies and other organizations to access information on water risks in a given region or area. Our global database uses 12 indicators of water quantity, water quality, and regulatory and reputational issues to calculate water risk around the world.
The practical, straightforward, user-friendly nature of our Aqueduct tool made it possible for McDonald’s to begin assessing water risk across its vast global supply chain. Suppliers survey the data available for their facility’s location, and then choose from a drop-down option that indicates whether overall water risk is low, medium, or high. The Coca-Cola Company, a supporter of the Aqueduct project, vouched for the usefulness and credibility of the maps to McDonald’s, one of its largest customers.
McDonald’s high profile endorsement of the Aqueduct tool and data will help WRI scale our work with companies to address water scarcity challenges worldwide.