We discuss their water-related risks, and the development and setting of water use targets.
Objective: To seek and share information about Sony’s management of water-related risks, and to support the development and setting of water use targets for the company’s 2030 planning process.
We met with Sony as part of an investor collaboration organized by Ceres, a large non-profit organization made up of investors, companies, and other non-profit groups. The work stems from Ceres’ Valuing Water Finance Initiative, a global investor-led initiative aimed at engaging companies with large water use footprints.11 NEI is the lead investor for the Sony collaboration; we will co-lead a collaboration with Amazon in 2024.
The Valuing Water Initiative lays out six corporate expectations12 that align with UN Sustainable Development Goal number six, “clean water and sanitation.” For our discussion, we were primarily focused on expectations around water consumption. The main use case we were looking at is the manufacture of semiconductors, sales of which make up 11% of Sony’s total revenue and which require significant volumes of water as an input. As with any critical input to a production process (see aluminum as an input for Ball Corporation on page 6), whatever risks there are to that input will be transferred up the chain. Sony needs a large, consistent supply of water for certain manufacturing sites around the world to maintain output, and if supply is affected by government-imposed restrictions, climate change, scarcity, reputational damage in the community, or other factors, that can have a major impact on the business.
Sony’s semiconductor operations are growing and expected to grow further, and the water footprint is growing as well. We want to understand how the company is addressing the potential long-term impacts on the business, how they intend to reduce their water use through recycling, and how they intend to support water accessibility in the communities where they operate, among other considerations.
It’s clear that Sony has been addressing the material risk of water for a number of years. They have long-term climate and water use targets extending to 2050, as well as incremental five-year plans to help them get there. As an example of such a target, for 2025, they have a goal of reducing water use intensity by 5% at their high water-usage sites (not all of them are). In addition to reducing water withdrawal rates, Sony is also investing in water recycling technologies to improve that aspect of the production process.
Next steps: Sony is beginning the process of setting sustainability business goals for 2030. It is our intention to engage them along the way so that we can provide input. We also intend to dig deeper into the company’s supply chain risks (component suppliers that also face water challenges), board oversight, and water use in high-risk geographic areas, among other related topics.
11 https://www.ceres.org/water/valuing-water-finance-initiative
