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Indirect water risks: retail & financial service sectors
The water risks for the retail and financial sectors are mostly indirect since they
are often connected to suppliers (retail sector, especially from agriculture) and
investments and/or in the countries they invest in (financial services sector) rather
than direct operations. Retailers rarely own the farms and processing plants that
are supplying them. The same applies for a bank’s investment portfolio. Though all
economic sectors are represented in the financial services sector, water risk is more
easily identifiable among some sectors.
Depending on the supplier or investment, simply shifting to other opportunities might
not be an option. Thus, the relationship between the retail sector and its suppliers and
the financial services sector and collective action for risk mitigation.
Indirect exposure to
water-related risks
through suppliers
can be very high,
especially for food and
apparel retailers.
3.2.5 Retail
In 2012, Germany’s retail sector contributed 16% to the GDP and grew 1.8% on
average annually since 2009. In 2013, the predicted turnover was more than
€432 billion (US$548.64 billion) 172 . The food retail industry, which includes
nine of Germany’s top 10 retail companies, comprises 32% of the total turnover.
The fashion and accessories branch is the second largest contributor with
18.6% turnover. Home and leisure, cosmetics and body care, and department
stores contribute less than 10% each to total turnover 173 .
Sector water risk and water intensity
The retail sector’s direct exposure to water-related risks are low as they operate
in Germany and use small amounts of water for cleaning, cooling, and
sanitary uses, and pollution is limited (see Figure 13). However, their indirect
exposure to water-related risks through suppliers can be very high, especially
for food and apparel retailers (see also sector description on 3.2.1 Textiles
and apparel and 3.2.3 Agriculture). Agricultural outputs are particularly dependent
on water for irrigation, cleaning, processing, power generation and
transportation. The water use of suppliers (like agriculture) may ultimately
impact overall water availability in a significant way, especially when located in
a threatened water basin.
Retailers face direct
and indirect water risks
related to their product
supply chains. For food
retailers these risks
are often connected to
agricultural production.
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