This Sustainable Water Company Is Turning ESG Commitments Into Growth Opportunities

Flow Beverage Corp. FLWBF FLOW (“Flow”) is a certified B Corp and one of the fastest-growing premium water companies in North America. Its high environmental, social and governance (ESG) standards and commitment to transparency make it an attractive choice for even the most stringent ESG portfolios, while also giving investors exposure to some of the fastest-growing market segments as economies continue to transition toward sustainability. 

Despite SEC Efforts, ESG Investing Is Still Tricky 

The SEC announced plans to implement stricter climate disclosure rules in March of last year. While the date of the final ruling has been pushed back twice since then, the new rules are now expected to be published sometime in the second half of this year, with the first climate disclosures under the new rules due in early 2024. 

The proposed rules would include more detailed reporting on greenhouse gas emissions across a company’s entire supply chain in addition to current requirements for disclosing climate-related risks to its operations. 

Many companies already disclose emissions in some way, but a lack of standardization makes it hard for investors to compare companies. Not only are there different accounting methods – with some more accurate than others – the extent of data included varies and there isn’t always enough transparency around exactly how a company tracked and calculated its emissions. 

The new SEC rules would standardize disclosures, but it’s hard to tell how much of an impact it would have on the underlying data being used. How does a large, multinational corporation accurately measure the emissions of each supplier and subcontractor in its supply chain, for example? Even requesting that data from every entity in its supply chain doesn’t guarantee that it will receive responses or that the data provided was accurately calculated. 

B Corp Certification Makes Due Diligence Easier

One workaround investors can use to find ESG investments in a market lacking standardization and transparency is to look for certified B Corps. B Corp certification is a third-party certification granted by B Lab. Companies must go through a rigorous investigation that audits every piece of the business from its policies and financials to the suppliers and sub-contractors in its supply chains. 

In order to pass this process and be granted certification, the company has to receive a score of at least 80 on a 200-question assessment, which is then verified through the investigation. Only about a third of companies who complete the initial assessment end up getting approved for certification, making it one of the most stringent and thorough ESG certifications available.

Though strict, there are now over 4,000 companies worldwide that are certified B corporations, giving investors a large pool of thoroughly vetted companies that all have to comply with standardized reporting requirements and undergo the verification process every three years to maintain certification. 

The assessment spans five categories: community, environment, workers, customers, and governance and B Lab provides an online database that shows not only the company’s overall score, but its scores in each of those categories. 

Flow’s overall impact score is 126.5, for example, putting it well above the minimum score of 80 and making it one of the highest-scoring B corps to date. In fact, Flow is the highest rated B Corp beverage company in the world and within the top 5% of all B Corp rated companies. Its highest scores are in the community, workers, and environment categories. And this current score represents a 34-point jump from its initial score of 92.4 when it was first certified in 2017. The company is aiming for a similarly high jump when it next applies for recertification, stating that it wants to increase that score by 30% by 2025. 

Flow Is A Certified B Corp In A Growing Market

Flow is a premium water company selling naturally alkaline spring water packaged in a renewable, plant-based carton. The water is responsibly sourced, with Flow extracting just 2% of the spring’s total capacity annually. The paperboard used to make the carton is sustainably sourced and 75% renewable while Flow has already achieved net zero operational emissions. 

The global market for green packaging like Flow’s exceeded $223 billion in 2022 and is expected to grow to over $325 billion by 2028. The market includes plant-based packaging and bioplastics that are designed to be reusable, recyclable or biodegradable to minimize the impact of packaging waste on the environment. Green packaging can also refer to packaging that is manufactured using renewable energy or packaging that is made from sustainably-sourced or recycled materials. 

The paper segment of that large global market is growing at the fastest rate as paperboards and bags are among the least expensive and most versatile to manufacture and they’re made from a renewable source; Flow already commands a 51% market share of carton format water in the United States, which is an increase from 45% this time last year. 

As it continues to post revenue growth and improve margins, Flow Beverage Corp. is working to achieve ambitious impact goals, too. The company says it’s working on becoming carbon negative by 2025 and developing a 100% renewable plant-based pack by 2030. It’s also working on recycling 98% of processing water by 2025. 
 

Featured photo by Alena Koval on Pexels.

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