Supply chain water-reporting practices in the food, beverage and tobacco sector: a comparative study

ABSTRACT

Companies are responsible for reporting not only their own water practices but also those of their suppliers. An evaluation of the supply chain water information in the sustainability and integrated reports of 49 food, beverage and tobacco firms listed on the JSE (South Africa), ASX (Australia) and Dow Jones Sustainability Index (DJSI) exchanges, respectively, was conducted. It was found that the companies fall short in their disclosure of consumption of water-related supply chain information. The firms listed on the DJSI and JSE outperformed the Australian companies. This paper presents and applies a novel water disclosure index of supply chain information.

KEYWORDS:

• Supply chain
• water reporting
• food
• beverage and tobacco sector
• sustainability reporting

Introduction

Water is an essential element in the food, beverage and tobacco industry. There are various ways it is used in this sector, and indeed it is often the main ingredient for many products (Jones et al., 2015b). Water scarcity and pollution are increasingly identified as key risks facing business (Hoekstra, 2014). Companies are encouraged to be responsible not only for their operations and processes in respect of water consumption and other environmental impacts, but also for their suppliers, thereby extending their environmental management activities and responsibilities outside their companies’ borders (Krause et al., 2009). Christ and Burritt (2017) averred that the need for corporate water management and accounting along supply chains should not be underestimated. Morrison and Schulte (2010) concurred by highlighting that significant water-related risks and impacts can occur in companies’ supply chains rather than in their direct operations. Yet, Bateman et al. (2017) found that most companies report on only their own operations. It is also difficult for large companies – especially in the food, beverage and tobacco sector – to identify smaller suppliers due to a lack of supplier involvement (Van Weele & Van Tubergen, 2017). If they do report on their supply chain, Hoekstra (2014) recommend – especially in areas of great water scarcity – the setting of reduction targets to measure the water consumption and pollution. Sustainability reporting – sometimes used interchangeably with corporate social responsibility (CSR) reporting – is a tool to help corporate management improve efficiency and reduce resource usage (GRI, 2020). Although policymakers use diverse methods to manage water resources, sustainability reporting and the reporting of water practices are not required by law (Zhou et al., 2018, 2021). Even so, companies encounter more pressure from stakeholders to act transparently and report their sustainability practices (Bernardi & Stark, 2018; Lozano & Huisingh, 2011). Moreover, Lueg and Pesheva (2021) report a positive effect between total shareholder returns and sustainability reporting, emphasizing that shareholders place value on such reporting and in turn can put pressure on companies to disclose even if it is not policy. Nonetheless, Morrison and Schulte (2010) and Christ (2014) aver that water reporting on supply chains is relatively underdeveloped. Our aim here is to contribute to this poorly served research area.

The main objective of this paper is to evaluate and compare the disclosure of water-related practices of supply chains in food, beverage and tobacco companies listed on three stock exchanges: the JSE Limited (previously the Johannesburg Stock Exchange) in South Africa, the ASX in Australia, and global firms listed on the Dow Jones Sustainability Index (DJSI). Australia, similar to South Africa, is particularly vulnerable to water scarcity, and although it is the driest inhabited continent, it has the highest water usage per capita in the world (Future Directions International, 2014; Godfrey, 2010; Timms & Holley, 2016). For companies operating in continents such as Europe, with a well-developed infrastructure and abundant rainfall, water security may appear to be of less concern (CDP (Carbon Disclosure Project), 2017a). However, for water-scarce countries such as South Africa and Australia, poor management of scarce water resources contribute to the water-related challenges faced by companies (Mueller et al., 2015). To identify and quantify water impacts are crucial for companies in order to make effective management decisions and create accountability – both internally and for their supply chains.

The novelty of this paper is a comparison of water-related disclosure of supply chain information of companies in two water-scarce countries with global ‘best practice’. We found that these companies poorly disclose the water-related aspects of their supply chains. Additionally, we revealed that both the DJSI and South African companies outperformed the Australian companies in terms of disclosing their water practices related to their supply chains.

Water security in South Africa, Australia and globally

After Australia, Africa is the second-most arid continent, and water security has become a critical issue as populations grow and climate change continues to affect rainfall patterns (Besada & Werner, 2015). South Africa, and specifically the western parts of the country, has experienced the worst drought in decades resulting from sustained below-average monthly rainfall since 2015 (CDP, 2017a; Masante et al., 2018; Muller, 2019). Conway et al. (2015) noted that the majority of climate models are projecting annual rainfall for southern Africa to decrease by 20% by 2080, resulting in reduced water availability and crop yields. The fact that 93% of South African companies reported water as a direct risk to their operations in 2017 (CDP, 2017a) resonates with water being one of the top global risks in terms of impact (WEF, 2019). Every year, South Africa uses approximately 15 billion m³ of water, and national demand is expected to increase to 17.7 billion m³ by 2030 due to population growth and industrial development (GreenCape, 2017; WWF, 2016). This implies that South Africa could be facing a water deficit of 17% per year by 2030, depending on which new supply systems are developed (CDP, 2017a; WWF, 2016). Donnenfeld et al. (2018) mentioned that South Africa is overexploiting its renewable water resources, and with the country’s water infrastructure in serious neglect, continuous forecasts of more withdrawal than supply are posing a bleak picture. The wide-ranging effects of climate change on the water resources availability and demand of southern Africa was highlighted in the conclusions of Kusangaya et al. (2014), with these researchers making a persuasive case for the need to strengthen water resource management.

As highlighted above, Australia is the driest inhabited continent, but it still has the highest water usage per capita in the world (Future Directions International, 2014; Godfrey, 2010). The Australian Bureau of Meteorology is responsible for producing regular reports on water resources, availability and use in Australia to inform decision-making by water managers and policymakers (Bureau of Meteorology, 2018). The agency recognizes that there has been a declining trend in per capita residential water use in major urban areas due to water restrictions and changes in user behaviour as a result of increased awareness about water scarcity. The Australian Bureau of Statistics (2019) compiles The Water Account of Australia, which presents the physical and monetary supply of water in the Australian economy. The information is prepared in accordance with the System of Environmental Economic Accounting (SEEA) framework – an international statistical standard under the auspices of the United Nations (UN) – relating to water consumption by industries and households in Australia. During the 2016–17 period, total consumptive water use was 16,558 GL, of which the agriculture, forestry and fishing industries consumed the most, with 10,504 GL (63%) (Australian Bureau of Statistics, 2019; Bureau of Meteorology, 2018). It is noteworthy that in 2016 and 2017, the gross value of Australian agriculture production was more than A$63 billion (Acres Australia, 2017), of which almost A$16 billion was irrigated produce (Australian Bureau of Statistics, 2018).

Water reporting and disclosure in South Africa, Australia and globally

The completeness and sophistication of water disclosures by companies are directly linked to the maturity and comprehensiveness of the firms’ water management practices. Thus, companies cannot report data they do not measure, nor management response strategies they are not pursuing. Yet, current reporting does not generally provide enough information for stakeholders to assess the various risks related to water scarcity and quality (Water Footprint Network, 2015). Although different countries have implemented varying water resource management efforts, water reporting and disclosure are not mandatory irrespective of the region (Zhou et al., 2018, 2021).

Limited literature dealing with water disclosure in South Africa could be found. Sánchez-Hernández et al. (2017) addressed water reporting in the agri-food sector in South Africa through thematic content analysis on 22 companies. Findings suggest that companies were committed to create value for all their stakeholders by conducting sustainable business through ethical dealings and protecting the environment. All the companies incorporated water management within different levels and with variant degrees of importance for its business strategy (Sánchez-Hernández et al., 2017). Correspondingly, the 37 companies analysed by Botha and Middelberg (2016) illustrated commitment towards water stewardship by reporting on water-related aspects. With the exception of the industrial sector, most companies were serious and transparent about reporting on water governance issues.

An Australian study was conducted by CPA Australia (2015) in the food, beverage and tobacco industry. The authors here scrutinized voluntary disclosures provided by nine organizations on three different dates. The rationale for the selection of different dates (March 2009, May 2013 and September 2014) was to consider how reporting practices might change as social pressures to be more water efficient eased, because of subsiding drought conditions in 2009 and 2010 (CPA Australia, 2015). It was observed that since 2009, the quality and quantity of water reporting became gradually more sensitive and responsive to the needs of the community. As found in previous studies (Leong et al., 2014; Michelon et al., 2015), it appeared that management chose not to disclose related available data that might reflect adversely on the organization (CPA Australia, 2015). Against a backdrop of increased Global Reporting Initiative (GRI)-focused reporting and organizations that are known to collect total water consumed, the findings revealed declining water-specific disclosures as drought conditions eased (CPA Australia, 2015). The GRI is a non-profit organization founded in 1997 (Musikanski, 2012) whose aim is to provide guidelines for sustainability reports using a multi-stakeholder approach (Eccles & Krzus, 2010).

Research on water disclosure was also conducted in countries such as China, which is considered a late starter in term of CSR reporting (Lu et al., 2017). Analysing 42 publicly listed forestry companies, Lu et al. (2017) revealed significant gaps in the provision of environmental information, with some enterprises not disclosing any data at all. Zhou et al. (2018) examined 334 listed Chinese companies in high water-risk industries between 2010 and 2015. The results reveal water disclosure is negatively correlated with corporate risk-taking, possibly because investors remain unconcerned as water disclosure is not mandatory and relatively new (Zhou et al., 2018). High water-risk enterprises are encouraged to identify water risks, strengthen water management and strive to improve communication with stakeholders in order to enhance corporate risk-taking (Zhou et al., 2018). Cantele et al. (2018) conducted an empirical analysis on 22 water utility companies in Italy by selecting 39 qualitative and quantitative indicators from the GRI and the Sustainability Accounting Standards Board (SASB) – a US-based non-profit organization. Cantele et al. (2018) found low-level disclosures with limited use of indicators, representing a tendency to use reports as communication tools for descriptive purposes. The latter stressed that an international industry-specific standard for water utilities could increase disclosure levels and reporting quality (Cantele et al., 2018).

Food, beverage and tobacco industry

Food production is extremely water intensive, with irrigation accounting for 70% of global freshwater withdrawal and 90% of freshwater consumption (Siebert et al., 2010). Consequently, the reduction of water use in agriculture is encouraged (Hess & Sutcliffe, 2018). Moreover, 25–30% of food produced globally is estimated to be lost at post-harvest or processing stages, or wasted at retail and consumer stages, representing substantial overall losses in the water and energy required (FAO, 2011; Kummu et al., 2012).

The Carbon Disclosure Project (CDP) Water Disclosure Programme directs companies to disclose water information that raises awareness and understanding of the business risks and opportunities around water (CDP, 2015). The CDP global water report of 2018, in which 2114 companies participated, reported increase of almost 50% in corporate water withdrawals between 2015 and 2018. The additional withdrawals in the food, beverage and agricultural, manufacturing and mineral-extraction sectors were most pronounced (CDP, 2018). Meneses et al. (2017) aver that water needs to be reused and conditioned to incorporate better water management and sustainability in food processing operations. Alkaya and Demirer (2015) found evidence that water recycling and reuse can be successfully implemented in the beverage industry as a sustainable water management approach. In order to determine areas where water-saving potential is present, water use evaluation or benchmarking was carried out, saving 55% of total water consumption by a selected company in Turkey (Alkaya & Demirer, 2015).

An exploratory study by Jones et al. (2015b) selected the world’s top 10 food and drinks companies, as ranked for social responsibility by Oxfam, an international charity. Substantial variations were revealed in their disclosures on their approach to water stewardship. Jones et al. (2015a, 2015b) reasoned that the lack of common and agreed frameworks and standards makes it difficult to establish significant comparisons between companies, and also to evaluate the contribution companies are making towards water stewardship at regional, national and international levels.

The interconnection between water, energy and food (WEF) is increasingly referred to as the ‘nexus’ (Green et al., 2017; Leck et al., 2015). At the core of the nexus debate are natural resource scarcities and the recognition that water, energy and food are interlinked with consequences for human well-being, poverty alleviation and the eradication of inequality (Halbe et al., 2015; Leck et al., 2015). Companies play a vital role in ensuring that supply chains are dynamic and able to provide food, energy and water (Whiteman et al., 2013).

The WEF nexus has been debated since the 2011 Bonn Nexus Conference. Endo et al. (2017) argue that clarification of the interrelationships is limited as the complex link between the three essential resources are often ignored and investigated separately. Endo et al. (2017) recognized a need for integrated indices and models and stressed that current mono-disciplinary research results need to be integrated in order to understand the complexities of WEF systems.

Supply chain engagement

Supply chain management (SCM) is defined as:

the management of a network of relationships within a firm and between independent organisations and business units that facilitate the forward and reverse flow of materials, services, finances and information from the original producer to the final customer with the benefits of adding value, maximising profitability through efficiencies and achieving customer satisfaction. (Stock & Boyer, 2009, p. 691)

With this definition in mind, it is evident that all the activities in the entire supply chain have an impact on the environment (Schaltegger & Burritt, 2014), and therefore on water as a scarce resource.

The GRI requirement to report on how a company addresses impacts in the supply chain related to products and services is addressed in the universal 100 series GRI 103 document. The GRI standards are divided into four series, as illustrated in Table 1.

GRI 103 deals with management approach disclosures to encourage reporting on impacts across the entire value chain. As a supplement to the GRI 103 document, the following examples are provided as guidance on how to report on engagement with suppliers (GRI, 2018):

• The organization can describe the number of suppliers with which it engages.

• How it engages with suppliers in order to help them improve their water management practices.

• The organization’s future plans and goals for working with suppliers on reducing water-related impacts.

The GRI also publishes topic-specific standards with water forming part of the 300 series – GRI 303: Water and Effluents (GRI, 2016). The GRI recommends that companies should report on the following, as illustrated in Table 2.

It is clear that the major trend is to move from company-wide reporting to reporting along the length of the supply chain. Up- and downstream impacts should form part of the reporting accounts. A company should report its overall approach for managing the effects it has, both in its own operations and elsewhere in the value chain. If the company has identified water-related influences in the supply chain and refers to its products and services as material, it should report additional information about these impacts.

Supply chain in the food, beverage and tobacco sector

Companies in the food, beverage and tobacco sector should be accountable for their own water-related practices and for their supply chain. The Ajinomoto Group (2018), a global Japanese food and biotechnology corporation, understands this by declaring that environmental issues cannot be solved and addressed by the efforts of only one company.

As a result of the pressures of population growth, consumers demand not only agricultural goods from sustainable food systems, but also commensurate quality and nutritional value (BASF, 2014; Rankin et al., 2011). Environmental concerns have become so prominent that environmental aspects are integrated with reports on SCM (Sarkis, 2012). Food retailers increasingly have to provide ‘environment-friendly’ products to their consumers, but should also demonstrate responsible environmental practices in the supply chain. By managing their activities in this way, they can ensure that environmental targets and policies are integrated upstream (with details of their suppliers) and downstream to the consumer (Petljak et al., 2018).

A total of 66 agribusinesses were included in a study by Topp-Becker and Ellis (2017) on the role of sustainability reporting in the agri-food supply chain. They concluded that, on average, companies scored only 20% for environmental reporting, and it appears that those along the agri-food supply chain have only moderately adopted sustainability and environmental evaluations (Topp-Becker & Ellis, 2017).

Weber and Hogberg-Saunders (2018) analysed the connection between water risk indicators and general corporate social responsibility ratings of 61 companies in the food and beverage industry, developing measures from an ecosystem view to evaluate whether firms address water risks from a sustainability or business case perspective. It revealed that 42% of the companies identified water risks as key factors in their agricultural inputs, 36% applied strategies to measure supply chain risks and 17% incorporated water policies in their procurement codes.

Materials and methods

In our study, a total of 57 companies listed on the JSE in South Africa, the ASX in Australia and global firms recorded on the DJSI in the food, beverage and tobacco industry were selected. The DJSI provides investors with objective benchmarks for managing their sustainability investment portfolios (DJSI, 2019). Firms listed on this exchange could therefore be regarded as those implementing ‘best sustainability practices’ due to the strict listing requirements. Companies in the food, beverage and tobacco industry were purposefully selected, not only for their dependence on water but also for their connection with the WEF nexus.

Our target was to select the top 20 companies in each of the three exchanges on the basis of market capitalization – which should have resulted in a total of 60. However, the study population ended up as 57 firms – 18, 26 and 13 from South Africa, Australia and global enterprises, respectively. The outcome was 16 companies from the JSE, 20 on the ASX (capped at 20 based on our target) and 13 global firms on the DJSI – a total of 49 companies (see Appendix 1 in the supplemental data online). The reasons for 16 instead of 18 companies from the JSE were that Libstar Holdings Ltd listed on the JSE on 9 May 2018 and had not published an annual or sustainability report at the time of the study. Furthermore, British American Tobacco was listed on the DJSI as well as on the JSE, but was included under the DJSI in order to compare with global best practices. For these reasons, the sample almost fully represented the population of firms listed on the three exchanges in the food, beverage and tobacco industry. Although these firms are not representative of the water usage of the entire industry in each country or region, the aim was not to characterize water-use behaviour in the food, beverage and tobacco industry, but rather to evaluate and compare the disclosure of supply chain water-related practices of listed companies in two water-scarce countries with global leaders in water reporting.

We then developed a water disclosure index – comprising four elements – in three phases (Table 3). Using a disclosure index to identify how many times a publication mentions or describes a theme is considered a practical and valuable research tool (Hooks & Van Staden, 2011; Schneider & Samkin, 2008). Themes could describe the governance or management aspects of water in a company’s sustainability or integrated reports based on benchmarks such as the GRI (Hooks & Van Staden, 2011; Schneider & Samkin, 2008):

• Phase 1 was derived from various integrated elements based on the following sources: (1) EN9 from the previous GRI G4 guidelines – measuring water sources significantly affected by the withdrawal of water; (2) the latest GRI standards 2018 – GRI 303: Water and Effluents; (3) the CDP water disclosure framework; and (4) the GRI sector guidelines for food and beverage processing. This is similar to the study of Weber and Hogberg-Saunders (2018), who applied their water risk benchmarking framework as a basis developed from the GRI.

• Phase 2 involved refinement of the elements into measurable items by including an assessment (ordinal) scale to distinguish between the poor and excellent disclosure of items (Hooks & Van Staden, 2011). A disclosure index using a binary coding system to record is similar to answering a closed-ended question. It consists of only one variable to determine the presence or absence of a characteristic and provides an aggregated measure of the quantity, and not the quality of disclosure (Beattie, 2014). It enables cross-sectional analysis of the frequency of disclosed items between the various reports (Guthrie & Abeysekera, 2006). Beattie et al. (2004) confirmed that these studies are often used to analyse inter-company, inter-industry/sector or inter-country differences, similar to the aim of this paper. However, more complex analysis involves not only assessing the quantity of themes, but also the quality of disclosure (Guthrie et al., 2004; Van Staden & Hooks, 2007).

• Phase 3 involved designing a quality description for each element in the water disclosure index to improve the accuracy of coding each item. These quality descriptions of each element were designed based on the literature review. Before the coding commenced, pilot coding was conducted and final changes applied to the disclosure index used as the measuring instrument. The final water disclosure index (Table 3) so derived was used to analyse the various sustainability, integrated or environmental reports.

Table 1. Global Reporting Initiative (GRI) standards

Series	Description
Universal series (100 series)
GRI 101	Foundation: GRI 101 sets out the reporting principle for defining report content and quality
GRI 102	General disclosures: used to report contextual information about a company and its sustainability practices
GRI 103	Management approach: used to report information about how a company manages a material topic. Applying GRI 103 allows the company to provide a narrative explanation of why the topic is material, where the impacts occur, and how the company manages the impacts
Topic-specific standards
200 series	Economic topics
300 series	Environmental topics (water is part of the 300 series and is named GRI 303: Water and Effluents)
400 series	Social topics

Source: Adapted from GRI (2016).

Table 2. Presenting supply chain information based on GRI 303

Disclosure item	Description	Metric
Water withdrawal	Total water withdrawal by suppliers causing significant water-related impacts in areas with water stress	Volume (ML)
Water discharge	Percentage of suppliers causing significant water-related impacts from discharge that have set minimum standards for the quality of their water discharge	%
Water consumption	Total water consumption by suppliers causing significant water-related impacts in areas with water stress	Volume (ML)

Source: Adapted from GRI (2018).

Table 3. Elements of the water disclosure index developed and applied in the study

	Coding
Elements	0	1	2
SC1: The company identifies suppliers causing significant water-related impacts	No disclosure	The company identifies suppliers causing significant impacts. Water withdrawal by suppliers in water stress areas	The company identifies suppliers causing significant impacts by quantifying withdrawal and discharge by suppliers
SC2: The company has a policy and strategy to manage water-related aspects in its supply chain	No disclosure	The company displays policies and strategies for water in their supply chain	The company displays policies and strategies for water in their supply chain by providing detailed information
SC3: The company identifies water risk factors in its supply chain	No disclosure	The company identifies water risk factors in its supply chain	The company identifies water risk factors in its supply chain and provides quantified information
SC4: The company indicates that it understands the WEF nexus by considering the up- and downstream role-players in its supply chain	No disclosure	The company indicates that it understands the WEF nexus	The company indicates that it understands the WEF nexus by identifying role-players and their effect on the supply chain

Note: WEF, water, energy and food.

The most recent sustainability and integrated reports of the survey population were downloaded from the respective company websites. These documents were interrogated through manual content analysis using the water disclosure index to evaluate the reporting and disclosure of supply chain water-related information for each company based on the elements SC1–SC4 (Table 3). These scores were aggregated to form an overall disclosure score.

The data on the companies were analysed in two phases:

• A mixed-method analysis of the data collected on the four elements measuring supply chain information – SC1–SC4 – for the 49 companies. An abductive reasoning approach was followed by presenting descriptive statistics for each element and then enhancing the results using examples of ‘best practice’ qualitative water disclosures (Dumay & Cai, 2015).

• The descriptive statistics calculated above were split into three indices to compare, by means of analysis of variance, the quality of supply chain reporting practices of the companies in our sample in the three countries surveyed.

Results

The results are presented in terms of the two phases of data analysis described above.

Supply chain elements

The descriptive statistics derived from the results of the disclosure scores for the four supply chain elements are presented in Table 4. Means of 0.55, 0.82, 0.98 and 0.88 out of a possible 2.0 were scored by the companies for elements SC1–SC4, respectively. According to the coding in Table 3 (0, 1 and 2), these results indicate that, on average, the firms fall short in their disclosure of supply chain water-related information.

The lowest disclosure score was recorded for SC1 of 0.55 out of a possible 2.0. The reason for this low score can be attributed to a lack of quantitative information provided by the firms in terms of identifying suppliers causing water-related impacts. It was, however, found that disclosures were often presented qualitatively by including case studies in the reports. These case studies often described aspects such as food safety and the important role farmers play within the firms’ supply chains. Although most of the companies do not disclose supply chain water-related information in their sustainability or integrated reports, some of them do so. Nestlé (2017b), the largest food company in the world, for example, stated that their greatest challenge in water stewardship – as well as their biggest opportunity – lies in addressing impacts within their supply chains. With over 4 million farmers in their supply chains, the company works directly with over 700,000 of them (Nestlé, 2017a). Additionally, Diageo (2015), a British alcoholic beverages company, represents an example of a company identifying and engaging with its suppliers. Grupo Nutresa (2017), a food-processing conglomerate based in Colombia, reported that 22 sustainability audits were performed on contractors and suppliers to verify aspects related to sustainable water resources. More broadly, Mondelez International (2017), an American confectionery, food and beverage company, disclosed that they engage with smallholder farmers ‘to promote sustainable supply chains’. More specifically, Fonterra (2018), a New Zealand multinational dairy cooperative, works with farmers to identify their water impact risk in order to prioritize improvement actions specific to their situation.

A South African packaged-goods company, Pioneer Foods (2018), also emphasized their engagement with stakeholders by reporting that during periods of drought and water shortages in South Africa, they ‘engage with suppliers, specialists and local and national government’. Distell (2018, p. 44), a South African beverage company, declared the following:

We understand that our long-term sustainability is intrinsically linked to the natural resources on which we depend, from farm to consumer and back again. We must therefore ensure that our supply chain practices are efficient, agile and protect the environment on which we depend – while meeting our customers’ requirements in full.

On average, however, the companies’ disclosures on the water practices of their supply chain are inadequate. This is consistent with findings by the Ceres investor coalition, UBS – a Swiss bank – and financial data provider Bloomberg that found limited water supply chain disclosures among a sample of 100 of the largest global publicly traded companies analysed in eight sectors (Ceres, 2010). They recognized water supply chain disclosure as a nascent reporting area, even for the food and beverage sector, with only 12% of firms collaborating with suppliers on water use or quality issues (Ceres, 2010; Wilburn & Wilburn, 2013).

Disclosure of supply chain information by companies on the three exchanges

The second part of the results compares the disclosure score of water-related supply chain information by the companies listed on the three exchanges. From Table 5, it is evident that the global firms listed on the DJSI performed the best, with an average disclosure score of 63%. This compares with the 47% score of the JSE companies, whereas the Australian companies recorded a dismal average score of 20%.

Higher supply chain disclosures were recorded by South African (47%) and global firms listed on the DJSI (63%). This could be ascribed to increased awareness by firms in the food, beverage and tobacco industry of the importance of water in their supply chain. Attributable to significant differences among the exchanges displayed in Table 5, additional tests known as post-hoc comparisons were performed to identify where these differences occur (Pallant, 2016). Tukey’s honestly significant difference test (HSD), one of the most commonly used tests, was used to indicate significant differences among the groups.

Table 4. Descriptive statistics of disclosure scores for supply chain (SC) elements

Elements	Minimum	Maximum	Mean
SC1: Identify suppliers causing water-related impacts	0	2	0.55
SC2: Policy to manage water-related aspects in SC	0	2	0.82
SC3: Identifies water risk factors in SC	0	2	0.98
SC4: Understands role players in SC (WEF nexus)	0	2	0.88

Note: WEF, water, energy and food.

Table 5. Supply chain information per exchange

Exchange	N	Mean (%)	SD
JSE	16	47	26
ASX	20	20	25
DJSI	13	63	19
Total/average	49	40	30

Note: N, number of companies listed.

Table 6. Tukey’s test for supply chain information

Supply chain information: Tukey Ba,b		Subset for alpha = 0.05
Country/region	N	1	2
Australia	20	20
South Africa	16		47
Global	13		63

The Tukey test results in Table 6 revealed significant differences between the disclosure scores of supply chain information, grouping the DJSI firms together with the JSE-listed companies in South Africa. This signifies that the mean differences in the disclosure levels of the firms listed on the DJSI and JSE exchanges are not statistically significant. The Australian firms listed on the ASX were grouped separately, which indicates that the mean disclosure score of these companies is statistically significantly less than for both the JSE and the DJSI companies. This could be ascribed to increased awareness by the DJSI and JSE firms in our survey of the importance of water to their supply chains.

The Association of Certified Chartered Accountants (ACCA) (2010) recorded an average score of 17% for disclosures on water supply chain and stewardship for the 32 Australian firms analysed in their research. The percentage of firms requiring supply chain water reporting in the South African CDP water report was 36%, whereas 41% of the companies engaged with their suppliers according to the CDP global water report in 2017 (CDP, 2017a, 2017b).

Conclusions

The aim of this paper was to evaluate and compare the disclosure of water-related practices of supply chains by selected food, beverage and tobacco companies listed on the JSE, ASX and DJSI exchanges. We found that these companies fall short in these practices as scores of less than 1.0 out of a possible 2.0 were recorded for the four supply chain elements. Although this evidence indicated that corporate reporting on supply chains is mostly descriptive, that is, qualitative, there is evidence of companies going further by initiating quantitative measures through collaboration with upstream suppliers in water-scarce locations on water use. For instance, Nestlé (2017b) implemented water-saving solutions at 2000 farms to reduce water use and increase crop productivity. Therefore, we recommend that companies follow this example by increasingly initiating quantitative measures by collaborating with the rest of their supply chain. We also recommend that companies improve their corporate reporting by disclosing these initiatives of quantitative measures implemented by their supply chains. The ultimate aim for companies should be to be part of a sustainable supply chain.

We also found that the DJSI- and JSE-listed companies outperformed the ASX firms in their disclosure of water-related supply chain information by achieving disclosure scores of 63%, 47% and 20%, respectively. These differences in disclosure scores highlight the value of comparing disclosure of water-related practices against water reporting pioneers (DJSI). This method of comparison can be extended to include other exchanges/countries and other economic sectors.

We have made the assumption that the newly developed water disclosure index measures the quality of water-related supply chain disclosures of the selected firms. This assumption can also be viewed as a shortcoming of the approach followed. Moreover, the approach relied upon the content published in the selected firms’ sustainability, integrated or environmental reports.

This paper provides evidence of measuring the disclosure of water-related supply chain information across the JSE, ASX and DJSI in the food, beverage and tobacco industries. South Africa and Australia are both water-scarce countries, which bears on the responsibility of companies and their supply chains, in respect of water consumption and other environmental impacts. Additionally, we provide a newly developed water disclosure index to be used as the foundation for the disclosure of water supply chain information. The index can be used as ‘best practice’ for water reporting of supply chain-related information by both companies and their suppliers. As the Ajinomoto Group (2018) declared, environmental problems cannot be solved by the efforts of one company. Therefore, it follows that companies should collaborate and learn from one another in order to adopt sustainable water practices and disclose water-related information in their supply chains.

Disclosure statement

No potential conflict of interest was reported by the authors.