Profits Stream In When Water Use Drops

Environmental friendliness is all well and good, but many companies have an even better reason to save the planet: They can save a whole lot of money in the process. Numerous businesses are now cutting costs and boosting profits by reducing the amount of water they use.

Words and deeds
A full 89% of the roughly 150 companies responding to The Carbon Disclosure Project's Water Disclosure 2010 Global Report "have developed specific water policies, strategies, and plans." As the CDP has observed, "Companies are already seeing a range of benefits from stronger balance sheets to the ability to attract and retain top talent as a result of reputational strength, and these are likely to become more pronounced as water challenges intensify."

It's not uncommon to see companies professing their pro-environment stances and stating inspiring goals. Among others, Unilever (NYSE: UL  ) has said, "To grow our business sustainably, we need to reduce the total amount of water used across our value chain, especially in regions where water availability is already under pressure from climate change."

Better yet, companies that offer specific and measurable environmental goals allow us to hold them accountable. Such accomplishments are particularly impressive when the company in question uses lots of natural resources. The $130 billion mining company Rio Tinto (NYSE: RTP  ) has said, "Our goal is to reduce our Group freshwater use per tonne of product by 6% by 2013 from a 2008 baseline."

Among other corporate achievements in water conservation:

  • General Electric (NYSE: GE  ) reduced its water usage by 30% -- nearly 4.6 billion gallons! -- between 2006 and 2009.
  • Colgate-Palmolive (NYSE: CL  ) cut its absolute water usage by 30% between 2002 and 2009.
  • Ford (NYSE: F  ) has pared back its water usage by 62% since 2000.
  • Las Vegas Sands (NYSE: LVS  ) has reduced its water consumption by some 100 million gallons annually at its Las Vegas casino properties. Its hotel rooms' plumbing fixtures alone use 20% less water than standard fixtures.

These hefty achievements demonstrate how the companies themselves benefit alongside the planet. When water use is halved, so are water bills.

The ripple effect
When these companies do the right thing, other good results follow. Their competitors can be pressured into following suit, lest they leave their greener rivals with a unique competitive advantage. The green companies are also often effectively pressuring those who do business with them to follow suit. Johnson Controls (NYSE: JCI  ) notes, "We work with more than 100,000 direct and indirect suppliers throughout the world, and expect them to conduct their operations in a socially and environmentally sustainable manner."

Water-use reduction is more than a feel-good environmental goal. It can lower operating costs, boost profitability, and enhance competitiveness. As you seek great companies in which to invest, look for those making more money by doing the right thing.

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Longtime Fool contributor Selena Maranjian owns shares of General Electric. Ford Motor is a Motley Fool Stock Advisor selection. Unilever is a Motley Fool Global Gains pick and a Motley Fool Income Investor recommendation. Try any of our investing newsletter services free for 30 days. The Motley Fool is Fools writing for Fools.


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