Water and Wastewater Treatment Industry ESG Thematic Report, 2022
Average ESG disclosure score for the water and wastewater treatment industry is between 60% and 70%. Our proprietary Environment, Social, and Corporate Governance (ESG) scoring framework analyzed 65 parameters across ESG, as represented in methodology section of this document. Xylem, Inc.; Veolia Environnement S.A..; and five more market leaders were part of our research. Four out of seven companies we researched scored above the average industry score. However, one market leader needs to focus more on ESG reporting and transparency, as it scored below 50%. We have seen a positive trend in ESG disclosure among market players engaged in water and wastewater treatment. According to our findings, the companies have scored substantially higher in governance, with an average of more than 75%, followed by environmental and social responsibility. In terms of the level of disclosure of ESG factors, Xylem, Inc. is the leader in the sector followed by Veolia Environnement SA and DuPont de Nemours, Inc, respectively.
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Environmental insights
Wastewater is polluted water that is released majorly from households and manufacturing facilities. Treatment of wastewater helps in reducing pollution and, thus, improving health of the ecosystem. It also leads to the reduction of harmful elements found in wastewater. Since only 3% of the water available on earth is drinkable, it is important to treat water so that it can be reused many times over. With wastewater treatment, the process is faster and helps provides crystal clear and safe, reusable water. The natural process of treating water has many aspects, and to speed up this process, multiple facilities that help in purifying the water have been designed. Apart from wastewater, the water treatment and water technology companies are dedicated to servicing their customers and solving their water-related issues. They are also striving to reduce carbon footprint by making their operations as eco-friendly as possible. In addition, water treated by facilities helps in eliminating chemically treated water in a sustainable manner.
Social insights
The social metricsof ESG consider promoting human rights & equality and empowering people by providing them with real choices & opportunities. Furthermore, this category also includes health and safety parameters, such as injury rates, OHSAS certifications, employee engagement programs, training, and community outreach. As one of the top companies in the area of social factor, Xylem scored the highest at around 80%. The company has implemented human rights policies in its operation and has its own Supplier Code of Conduct, which states that all suppliers are expected to respect human rights and work accordingly. In 2020, Xylem, Inc. was recognized in the Human Rights Campaign Equality Index for its efforts.
Governance insights
The right kind of corporate governance can improve a performance of a business, help it become more stable & productive, and generate new opportunities in the future. Good governance also encourages investor confidence. We have found that companies that rank well below average in good governance characteristics are most vulnerable to mismanagement and less likely to capitalize on opportunities. There are a variety of factors considered under governance factors, including ethics, cyber security, anticorruption, policies & amendments, and board diversity.
Dupont de Nemours, Inc. ranked highest in corporate governance compared to its peers operating within the water and wastewater treatment sector, based on Grand View Research's ESG scoring model. Over 90% of the company's board consists of independent directors, which increases its credibility and governance standards among investors and consumers. The company has a separate Code of Conduct that sets forth its expectations regarding bribery, corruption, conflicts of interest, political contributions, government relations, product stewardship, environment protection & sustainability, human rights, respect for people, transparency, and ethics reporting. In addition, employees and contractors have the option of reporting ethics concerns to management or human resources, or through the DuPont Ethics and Compliance Hotline (DuPont Hotline).
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