Drought & Floods Cutting Profits For Major Retailers

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Increases in drought and floods are affecting the bottom line—or the prices of consumer goods—at businesses from Kraft to the Gap, Environmental Leader reports.

Kraft, Sara Lee and Nestle have announced plans to raise prices after droughts and floods drove up commodity prices. And The Gap cut its profit forecast by 22 percent after the year's cotton harvest, already a highly water-intensive crop, was devastated by the Texas drought, a Reuters story reported.

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These stresses look set to intensify. On Tuesday, the World Resources Institute said that water consumption has been growing over twice as quickly as the global population. The report raised alarm bells as the world population races towards the 7 billion mark, which the UN estimates will happen on October 31.

In the Guardian, MillerCoors head of corporate social responsibility Kim Marotta said the company has had to put “considerable funds” into water-related projects that don’t offer the kinds of returns on investment the company looks for, simply because the initiatives are necessary to keep the business going. In one major investment, the company recently bought a new pasteurizer water reclaim system that it says will save up to 20 million gallons a year.

The Reuters story went on to point out that water is also a concern in areas already strapped for resources and that for international aid groups, water shortages pose a risk of increased disaster. The ongoing crisis in East Africa is the clearest example of that.

Tags: Clothing | Drought | Water Crisis