Suntory Group has made achieving water security a materiarity in the Suntory Group's Environmental Principles and continues to conduct various water-related assessments at Institute for Water Science, which was established in 2003. We conduct water risk assessments to ensure sustainable business operations and leverage the insights to advance environmental management. We also consider water risk assessment when developing new businesses.
Water Risks in Suntory Group Business Operations
Water is Suntory Group's most important raw ingredient and a precious shared resource with local communities and ecosystems. Consequently, conducting water risk assessment to understand the impact of our business on local communities and ecosystems is essential for achieving sustainable business growth. Suntory Group has identified our impacts on nature and dependencies on ecosystem services for direct operations in our beverage business, alcoholic beverage business, as well as for other operations, and our upstream value chain, summarizing the pathways. Risks have been listed based on the identified dependency pathway and impact pathway, while the financial impact was evaluated by calculating the expected value of the potential loss and the probability of occurrence. The assessment found that the significant financial impacts from water resources in direct operations are operational shutdowns due to extreme weather such as floods and storm surges, increased costs for quality control and wastewater regulations in cases of water quality deterioration in surrounding areas, and operational shutdowns caused by water shortages due to excessive water withdrawal and increased droughts in surrounding areas (for more information, see Disclosures based on the TNFD and TCFD Recommendations). Operational shutdowns due to flooding or storm surges pose an acute physical risk, with losses expected to result from flood damage to assets at production sites, the associated response costs, and sales losses. On the other hand, increased costs from water quality deterioration and operational shutdowns due to water shortages are expected to arise from the complex interaction of 2 elements: physical chronic risks and transitional risks. Physical chronic risks include increased droughts due to climate change, unstable water supplies resulting from excessive water withdrawal, and deterioration in water quality caused by changes in flow conditions and wastewater eutrophication. Transition risks may also arise from the complex interplay of factors such as infrastructure development, taxation, and other policies and regulations, as well as population growth and technological influences—all of which could impact wastewater regulations and water procurement costs. These risks are particularly likely to occur in areas of high-water stress and could have a significant impact on business operations. Water stress is defined as the inability to secure sufficient freshwater resources to meet the demands of a community or an ecosystem. This is not only due to an insufficient quantity of freshwater resources, but also from water pollution and limited access to water. When combined with factors other than water stress (for example, floods), the likelihood of exposure to risks from watersheds increases. For these reasons, the Suntory Group has prioritized addressing complex water risks, such as flooding, water shortages, and water pollution, in areas of high water stress where the financial impacts are expected to be substantial.
Source: September 2014 discussion paper by The CEO Water Mandate: Driving Harmonization of Water-Related Terminology
Water Risk Assessment for Direct Operations
From a financial impact perspective, we have prioritized Suntory Group production sites* for direct operations, identifying priority sites with high water risk.
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*Directly operated Suntory Group production sites: 27 factories in Japan, 52 factories outside Japan
1. Water Stress Conditions in Countries with Production Sites
We assess the water stress conditions in countries where our production sites are located using Baseline Water Stress, a globally recognized tool developed by the World Resources Institute, to evaluate water stress across countries.
| Baseline Water Stress | |
|---|---|
| Extremely high | India |
| High | Mexico, Spain, Thailand |
| Medium-high | USA, Australia, Germany, Vietnam |
| Low-medium | Japan, Canada, UK, France, Taiwan |
| Low | Ireland, New Zealand |
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*Based on country scores for Baseline Water Stress as used in Aqueduct 4.0 Current and Future Country Rankings by World Resources Institute.
2. Water Risk Assessment for Watersheds of Production Sites
In addition to national-level water stress assessments, we also carry out water risk assessments for the watersheds in which our production sites are located, identifying priority sites for water risk management. The following outlines the assessment process and the progress in risk management.
Identification of Priority Sites
The first round of the assessment narrowed down priority sites based on findings gained from corporate guidance in the Science Based Targets Network (SBTN) validation pilot,* which Suntory Holdings joined in 2023. First, we analyzed the quantity and quality of available water resources in the watershed to assess the state of nature on which the production site depends. The assessment used several indicators from Aqueduct 4.0 and the Water Risk Filter developed by the World Wide Fund for Nature (WWF). For the assessment of water scarcity risk, we used the 3 indicators: Baseline Water Stress, Water Depletion, and Blue Water Scarcity, assessing the highest score as the risk score. In areas where these indicators show high scores, there is likely to be insufficient water resources to meet demand. We assessed water quality using the 3 indicators: Coastal Eutrophication Potential, Nitrate-Nitrite Concentration, and Periphyton Growth Potential, assessing the highest score as the risk score. Higher scores for each index indicate greater exposure to eutrophication. Furthermore, to assess the impact of our operations at production sites on watersheds, we normalized the values of water withdrawal and water pollutants contained in wastewater (weight equivalents of nitrogen and phosphorus) and compiled a list for each site. However, assessment of water pollutants was limited to facilities that discharge wastewater directly into rivers and, excluded facilities that discharge wastewater via sewer systems. Next, to identify sites at high risk in terms of both dependencies and impacts on state of nature, we multiplied the normalized water scarcity risk score by the normalized water withdrawal score and multiplied the normalized score for water quality by the normalized score for water pollutants, then identified priority sites that were located within the top 10 watersheds ranked by their score, taking into account their business importance. Of the identified sites, based on an assessment using the Integrated Biodiversity Assessment Tool (IBAT) and multiple biodiversity indicators, we identified sites located within a 20km radius of a protected area or key biodiversity area and are expected to have a relatively high level of biodiversity vulnerability or restoration difficulty.
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*Corporate guidance pilot study to verify methodology for setting SBTs for the Science Based Targets Network
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Water Depletion of Water Risk Filter (5 Levels)
Source: WWF
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2050 Water Stress BAU* Scenario Risk
Assessment by Aqueduct (5 Levels)
Source: Based on the World Resources Institute’s Water Risk Filter
*BAU: Business As Usual
Number of High Priority Sites
| Number of High Priority Sites | Beverage business | Alcoholic beverage | business Other | |
|---|---|---|---|---|
| Number of locations with high water-resource dependency and impact risk | 9 | 4 | - | |
| Of these, locations with a large effect on biodiversity | 3 | 3 | - | |
| Number of locations with high water-quality dependency and impact risk | - | 15 | 3 | |
| Of these, locations with a large effect on biodiversity | - | - | - | |
Assessing Water Shortage Risks using Water Security Compass, an Online Platform for Global Water Risk Assessment
Suntory Holdings, in collaboration with the Graduate School of Engineering at the UTokyo and Nippon Koei Co., Ltd., a subsidiary of ID&E Holdings Co., Ltd., has established ‘the Research Initiative for Global Hydrologic Cycles project’ at the UTokyo. Through this initiative, the partners have jointly developed an online platform called ‘Water Security Compass,’ which enables long-term, use-specific assessment of water scarcity risks based on water supply and demand. The platform has been made publicly available free of charge since the summer of 2024. (See https://water-sc.diasjp.net/
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The Research Initiative for Global Hydrologic Cycles project was established in 2022 to combine the knowledge of companies and universities, promoting research and development, social implementation of developed technologies, and human resource development. This is an industry-academia collaboration framework involving the UTokyo, Suntory Holdings, and Nippon Koei.
Developed through this project, the Water Security Compass utilizes H08, developed by UTokyo and others, which consolidates recent breakthroughs in the fields of hydrology and geophysics, and simulate the global water cycle. By incorporating the impact of seasonal changes and the effects of dams and other infrastructure on water quantity into simulations, the Water Security Compass is an online platform which provides a picture in a rarely high resolution of how much water is needed and supplied for various locations around the world, and can visualize the extent to which water resources will be in short supply for different uses, both in the present and for the future.
One of Water Security Compass’ indicators, Cumulative Deficit to Demand (CDTD), was used to assess water scarcity risk for locations with high water-resource dependency and impact risk. CDTD is an indicator that assesses the percentage of a watershed’s water resources that are in short supply relative to water demand. The indicator showed that 3 priority sites in the beverage business and 1 priority site in the alcoholic beverage business have the potential for a 20–40% shortfall in water resources relative to water demand during certain seasons of the year. In these areas, it is highly likely that there will be water withdrawal and water supply restrictions for the plant's water resources.
Figure: Screenshot from a Water Security Compass simulation
The Cumulative Deficit to Demand (CDTD) indicator makes it possible to identify areas where water shortages are likely to occur.
● Organizations Participating in the Global Water Cycle Social Cooperation Program
- The University of Tokyo, Graduate School of Engineering, Department of Civil Engineering
- Suntory Holdings Limited
- Suntory Global Innovation Center Limited’s Institute for Water Science
- Nippon Koei Co., Ltd., Central Research Center, Center for Advanced Research
3. Risk Reduction Efforts at Priority Sites
As part of our efforts to reduce risk at identified priority sites, we regularly evaluate the level of actions taken and confirm progress for water management (water withdrawal and water-saving) at our production sites and water replenishment and conservation efforts in coexistence with communities. Since the condition of the water resources in each watershed is different, we have measures in place to reduce the risks associated with local conditions.
a. Water Management (Water withdrawal and water-saving management)
As water is a precious resource shared with the community and the ecosystem, our plants must manage water responsibly and appropriately.
Water sources for our plants are broadly divided into 2 categories: city water and natural water (surface water or groundwater). Generally, city water is shared among various users in the local area, so the water source area is wide, and the entity responsible for managing water withdrawal from water sources is the local water authority. Water conservation management needs to be implemented appropriately in accordance with the water supply management policies and plans of the local water authority, including climate change adaptability plans. On the other hand, when a plant uses natural water (surface water or groundwater), we are the responsible entity for managing intake via the plant’s intake gate and need to proactively promote water intake and water conservation management efforts to adapt to environmental changes such as climate change.
Based on the above points, we have assessed the level of actions to manage water withdrawal and water-saving at each site. The following 2 items were evaluated:
(1) Water Ｗithdrawal Management
Demonstrating appropriate water withdrawal management (ensuring water is not excessively withdrawn)
- *Plants that use municipal water are not covered as the water authorities manage the water withdrawal
<Assessment Criteria>
- The ability to collect the required water withdrawal data to demonstrate that water withdrawals are not significantly impacting local river and groundwater levels.
- Required water withdrawal data is being collected.
Required water withdrawal data is not collected
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Part of the required water withdrawal data is not collected
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All required water withdrawal data is collected, and water withdrawal is appropriately managed
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<Assessment Results>
The following shows the water withdrawal management level of each plant represented as a pie chart. The percentage of Green-rated plants for water intake management remained at 100% in December 2024, the same as for December 2023.
(2) Water Conservation Management
Demontrating effective water conservation management (avoiding wasteful use of water)
<Assessment Criteria>
- Target was established to promote efficient use of water.
- Conducting activities to achieve the target yearly.
- Target is achieved yearly.
No med-term target for water intensity
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No yearly target for water intensity or not achieved
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The yearly target for water intensity has achieved
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<Assessment Results>
The following shows the water-conservation management level of each plant. As a result of setting a medium-term target and conducting water-conservation measures to achieve the yearly target, the percentage of plants that have the water-conservation management level of Green increased from 68% (December 2023) to 88% (December 2024).
We will continue to conduct measures to reduce risks using this process.
b. Water Resource Replenishment and Conservation in Coexistence with the Local Community
Suntory Holdings recognizes that we are a member of the watershed society since we share the use of water resources with the community. We therefore seek to contribute to its development by replenishing and conserving water resources in the watershed by working hand-in-hand with the various stakeholders.
Specifically, following the roadmap for water source replenishment efforts in the Environmental Targets toward 2030, in cooperation with local stakeholders, we are identifying water-related issues in the watersheds where our plants are located. With the agreement of major stakeholders, we are gradually implementing water resource conservation initiatives that will help resolve these issues.
Based on the above points, we have assessed the progress of measures to co-exist with the community at each site.
<Assessment Criteria>
- Identifying water issues in the watershed to ensure water sustainability.
- Working with local stakeholders to implement measures that contribute to resolving water issues.
Water-related issues in the watershed are not identified
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Water-related issues in the watershed are identified
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Working with the community to resolve water-related issues in the watershed
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<Assessment Results>
The following shows the progress in water resource conservation efforts for each site through collaborative activities in the watershed. As a result of steady efforts at each plant, the proportion of plants reaching the level of Green was 63% in December 2024.
In each area, we identify water-related issues and progress water source conservation efforts with experts such as university professors.
In Mexico, tequila maker Casa Sauza is a partner in the Charco Bendito project for water replenishment activities. This watershed initiative is a collaboration with the Beverage Industry Environmental Roundtable (BIER) and 13 other manufacturing companies working together to restore ecology and forests in the Lerma-Santiago River watershed through reforestation, soil conservation, and aquifer recharge activities. This connectivity was fragmented by a highway built in the area. This project collaborates with local communities to provide drinking water to local residents who lack access to water. It also supports local sustainable agriculture and forestry employment through beekeeping and honey production, and protects important community heritage areas.
In the Gurugram region of northern India, widespread flooding due to heavy rainfall occurs while rapid urbanization and industrial development have led to infrastructure shortages and depletion of natural water sources, causing many residents to face water shortages. Suntory Group implemented a pond restoration project in 2024 to supply agricultural and household water in the Gurugram area. This project restored the degraded pond to improve water supply, enhance water quality, treat wastewater, capture rainwater, and restore biodiversity, significantly increasing groundwater recharge levels. Additionally, a public park was established for residents to enjoy exercise and play, improving the living standards of local farmers and residents and strengthening the community's economic resilience.
Since 2021, the Toledo Plant in Spain has also been carrying out a project called the Guardians del Tajo to enhance water quantity and quality and increase biodiversity in the Guajaraz Reservoir in the Tajo River watershed. Working with a local NGO for ecological and hydrological surveys, we signed an agreement with the city council of Layos (Toledo Province) in November 2023 to reforest approximately 2 hectares of municipal forest. Activities under the agreement include reforestation and greening of land adjacent to the right bank of the Layos River from 2023 to 2025, with the aim of increasing biodiversity in the area, as well as fixing and fertilizing the soil to prevent erosion processes, reducing pollution diffusion, enhancing water infiltration capacity, and capturing atmospheric CO2. Furthermore, to assess the future impacts of climate change on the Guajaraz Reservoir, which serves as the plant’s water source, we are developing a simulation model and conducting an analysis in collaboration with a hydrological research team from the University of Alcala. In this research, we assessed the impacts of climate change on the Guajaraz Reservoir using a hydrological model called SWAT+. Of the climate change scenarios based on future projections of greenhouse gas concentrations by the Intergovernmental Panel on Climate Change (IPCC), we made future projections using RCP 8.5, which has the highest greenhouse gas emissions. We are now estimating how much the amount of water flowing into the reservoir from rivers upstream will decrease by the end of the 21st century.
In Thailand, we are conducting joint research with Chiang Mai University. We are conducting research on the water balance of the entire watershed, including Pasak Jolasid Dam, which is the water source for our Saraburi Plant, and how to encourage local engagement. Additionally, we are analyzing how groundwater flows and identifying which areas would most benefit from activities to enhance groundwater recharge. Based on the knowledge gained, we plan to decide on what initiatives to implement in which areas at Pasak Jolasid Dam and the entire Pasak watershed. We will continue to follow the roadmap toward 2030 to protect and develop water resources and steadily conduct water resource conservation activities.
In addition, we have extended our Mizuiku - education program for nature and water to 1.19 million people in 8 countries, conveying the importance of protecting water resources mainly to local children so they can take that knowledge into the future.
