Consumer Durables Impact Report: All Industries Edition, Q1 2025

Water Risks and Trade Barriers Threaten Durables Sector Value Chains

This cross-sectoral analysis reveals how water-related risks are emerging as critical sustainability challenges across the consumer durables landscape, with 60% of global GDP demonstrating direct water dependency. The research spans the manufacturing, retail, and fashion segments, examining how physical water risks - such as scarcity and flooding - impact operational continuity, supply chain resilience, and regulatory compliance across diverse business models and geographies.

The report additionally uncovers how recent tariff volatility has disrupted water stewardship initiatives for 52% of companies creating economic uncertainties that delay critical investments.

Call to Action: Consumer durables companies should develop regionally balanced production networks and implement flexible water management strategies that can adapt to trade policy fluctuations ensuring environmental commitments remain viable despite economic pressures.

The report identifies significant reporting disparities in water-related ESG disclosures, with Consumer Non-durables, Process Industries, Energy Minerals and Consumer Durables demonstrating the highest disclosure rates for key metrics. This pattern largely correlates with SASB's materiality designations, suggesting a growing alignment between voluntary reporting and formal materiality assessment frameworks. However, substantial gaps remain, particularly in metrics relating to water-stressed areas, indicating potential blind spots in risk identification and management.

This analysis examines how leading companies, such as Arçelik, are implementing advanced water efficiency measures, resulting in a 15% reduction in water consumption across operations while addressing both financial materiality (operational cost reduction and regulatory compliance) and impact materiality (watershed stewardship and community relations) considerations. These initiatives represent emerging best practices in integrated water management, balancing business imperatives with broader ecological and social responsibilities in line with the principles of double materiality.

The report examines how inadequate representation of water risks in traditional ESG frameworks has potentially understated critical dependencies, particularly for technology and manufacturing sectors with significant cooling and processing requirements. This analytical gap creates potential market inefficiencies, where water-intensive operations may be underpriced relative to their actual risk exposure - a consideration that is increasingly relevant for investors applying sophisticated sustainability analysis to portfolio construction and risk management.

Looking ahead, the report identifies emerging regulatory trends that are likely to intensify disclosure requirements related to water consumption, efficiency, and watershed impacts across consumer durables subsectors. Companies implementing robust water risk assessment methodologies and mitigation strategies are demonstrating enhanced resilience against both physical climate risks and transition risks associated with evolving policy landscapes. The financial implications extend beyond direct operational considerations to encompass reputation management, capital accessibility and strategic positioning in increasingly water-constrained operating environments.