WHEREAS: Consumption of freshwater surpasses the rate at which it can be naturally replenished in many regions, creating water shortage risks for companies, communities, and ecosystems. Compounded by climate change, the World Resources Institute predicts the world will be unable to meet 56 percent of global water demand by 2030.[1]
Companies without a plan to adapt could be exposed to risks including increased input costs, price volatility, shifting production zones, stranded assets, government targets, and loss of social license to operate. Barclays warns that the consumer staple sector, including agriculture, food, and beverage companies, faces a potential $200 billion impact from water scarcity risks. Monster acknowledges the financial materiality of water stress, noting that weather impacts on key commodities and water availability, quality, or pricing could adversely impact its business results.[2]
Monster’s operations and supply chain are reliant on high water risk regions. For example, the company’s operations rely on water from the Colorado River Basin (CRB) which may compromise long-term profitability. The CRB is experiencing chronic and severe water shortages, States are implementing water use reduction regulations, impacting agricultural production, and federal regulators are developing new water use guidelines to take effect in 2026. In the CRB, over 80 percent of water is consumed by agriculture and industry, calling into question Monster’s value chain resilience and increasing the likelihood of brand repercussions.[3]
CDP predicts the financial impacts of water risks are five times greater than the costs of addressing them.[4] Although Monster conducted a water risk assessment of its operations, it has not analyzed its supply chain or disclosed a measurable strategy to mitigate water risks.
Given Monster's dependence on freshwater, water shortages pose a financial risk to the company. For investors to feel confident in the Company’s water risk management, Monster should align with best practices such as those outlined by the Corporate Expectations for Valuing Water and set quantitative, timebound targets to reduce water use across its operations and supply chain, especially in water-stressed areas.[5] Peers including PepsiCo have established such targets.[6]