Organization: Potash Corporation of Saskatchewan Inc.

Year: 2010

Description: WHEREAS: Potash Corporation relies extensively on the availability of water for the production of potash, phosphate and nitrogen. There are physical, reputational and regulatory risk arising from such reliance, particularly as climate change is altering hydrologic cycles causing increased flooding in some areas and droughts in others.
 
Water is increasingly recognized as a strategic business risk. There is a growing volume of investment research on water indicating that the value of water is now recognized in an investment context. In March 2008, JP Morgan published Watching Water: A guide to evaluating corporate risks in a thirsty world and in February 2009 the investor coalition Ceres published Water Scarcity and Climate Change: Growing Risks for Businesses & Investors.
 
Such reports indicate that companies are potentially exposed to several challenges related to increasing water demand, water scarcity and declining water quality, all of which could significantly impact business operations. Potential impacts include: higher costs for access to water and pre-treatment; regulatory caps and more stringent regulations for wastewater treatment; decreased water availability; conflicts with local communities and other users; operational disruptions; increased responsibility and costs to implement community water infrastructure to protect the company’s reputation. Companies that fail to address these issues have the potential  to present material risks to shareholders.
 
Potash has already experienced some of these impacts. New regulatory limits in Ohio for water discharges took effect in September 2009 with implications for Potash’s Cincinnati facility. In addition, the company paid $1.2 million in 2008 to support community water infrastructure in Penobsquis, New Brunswick and continues to supply drinking water to residents. Finally, Potash has significant investments in countries where water scarcity is a critical issue, such as Israel, Jordan and China.
 
To date, Potash has not published a water strategy or water targets to drive the more efficient use of water resources. While Potash has commendable disclosure on some water metrics such as amount of water withdrawn and amount of water recycled, there is no strategic discussion of water as a risk to the company’s operations and no consideration of how those risks are or will be mitigated.
 
Business disclosure of water-related issues will benefit Potash by enhancing the company’s understanding of the risks and opportunities while providing investors and other stakeholders with better information (see https://www.cdproject.net/en-US/Programmes/Documents/CDP_Water_Disclosure_ PDF.pdf). 
 
Several organizations have devoted resources to developing tools for corporate water risk assessments including the World Business Council on Sustainable Development and the Water Footprint Network. Teck Resources undertook a Global Water Risk Assessment in 2007 and peers such as Suncor and Nexen have developed water principles and set absolute water reduction targets.
 
BE IT RESOLVED THAT: The Board of Directors provide a report to shareholders by September 2010, prepared at reasonable cost and omitting proprietary information, describing how Potash Corporation is assessing the physical, regulatory and reputational risks associated with water as it relates to the company’s operations and investments.