American Water Works is the largest publicly traded US water and wastewater utility company. They serve around 15 million people across 16 American states. People depend on them.
American Water is also a company that dares to care about sustainable business practices.
President CEO Walter Lynch has described the company’s sustainability approach by saying that,
“companies must do more than just put words down on paper, they need to show defined and measured actions and results that are reflective of a company’s commitment to ESG.”
When you think about the larger industry, this makes a lot of sense.
The water sector is highly exposed to sustainability issues. Freshwater use, for instance, is one of the nine planetary boundaries defined by the Stockholm Resilience Center. Plus, water makes up two of the seventeen UN Sustainable Development Goals.
So, with all eyes on water, good management is critical. Equally, the effective management of water and the company itself will earn you widespread recognition.
Just a few months ago, Standard & Poor’s gave American Water the highest sustainability ranking score in the United States and 2nd highest in the world.
American Water also improved its CDP scorecard dramatically.
CDP (formerly known as the Carbon Disclosure Project) requests environmental information from businesses on behalf of investors. Armed with all the information, they then rate the performance of those companies against strict sustainability criteria.
From a D score in 2018, American Water jumped to a B rating within a single year.
American Water also ranked 16th on the Global 100 list of the world’s most sustainable companies. This list is compiled annually by the Canadian media and research firm Corporate Knights. No other water utility made the prestigious list.
They also made the cut with an elite 22nd position on Barron’s Magazine’s 100 Most Sustainable Companies this year.
And yes, there’s more.
This year, they were included in Bloomberg’s Gender Equality Index as well, given that their Board includes women and men in a near 50:50 ratio.
To top it off, American Water is listed in the only US investment fund that’s focused on companies with strong racial and ethnic diversity policies (the Impact Shares NAACP Minority Empowerment ETF).
If EGOT (winning the Emmy, Grammy, Oscar and Tony Awards) was a thing in corporate sustainability, American Water would have achieved it.
So, what are the metrics behind these accolades? What’s the magic sauce?
For starters, American Water has a target of reducing their greenhouse gas emissions by 40% by 2025. (That’s compared to a 2007 baseline.) Believe it or not, they already achieved a 31% reduction by 2018.
A quick glance at the UN’s Climate Action Portal will tell you that part of this success comes from having established an internal carbon price.
And when you look at their latest sustainability report, you can find more of these impressive facts.
In 2018, for instance, they achieved a 3.3-billion-gallon reduction in water use through efficiency measures. That’s about 30 full bathtubs of water saved annually for every customer.
Did we mention the company also recycles over 1 billion gallons of water per year?
So, yes, it’s clear that American Water puts the money where the mouth is.
And we mean that in a literal sense too. The water utility company plans to invest up to $8.6 billion between 2019 and 2023 to maintain and update their vast infrastructure.
With hundreds of treatment plants, 51,000 miles of pipes and thousands of wells, pumping stations and storage facilities under their care, they certainly have their work cut out for them.
But we give credit where credit is due: it’s become evident that American Water can live up to the task.