Water – Is Your Company at Risk?

The consulting firm McKinsey & Company predicts that in just 20 years the demand for water will be 40 percent higher than it is today. Companies – many of which have operations that rely on cheap, plentiful, clean water – will undoubtedly be impacted. If you think your company will not be impacted by this issue, you might need to think again.

These messages were broadcast loud and clear last month at World Water Week, a forum held in Stockholm, Sweden where individuals and organizations gathered to talk about how water is used, why water supply is threatened and what can be done about it.

Several global companies attended the event.   Representatives from beverage to apparel companies spoke about their efforts to understand and manage water risks and opportunities. The unique thing about water, which makes it different from carbon, is that water is an industry- and region-specific issue.

Water-intensive Industries

Seventy percent of the world’s fresh water supply is used by agriculture for irrigation. The effects of water shortage could ripple through the supply chain impacting not only farmers, but consumer product industries that rely on agricultural products such as food and apparel companies. For example, this past spring in India, the weakest rainy season in three years not only threatened cotton growers, but also raised prices for companies like Levi Strauss and Gap.

Companies that depend on water in their manufacturing process are also wise to understand their water-related risk. While beverage companies top this list, other industries such as biotech, metals, mining and energy also rely heavily on water.

Price of Water

Water is an invaluable commodity, but it is priced very low. On a utility bill, water is often a fraction of energy costs for a company and therefore receives less attention. To address this challenge, several organizations are working to find a “real cost” of water – incorporating expenditures associated with the energy needed to pump and transport water, sanitize water, the discharge and also the geo-political challenges.

Resources for Companies

Several groups, many of which were present in Stockholm, have developed or are developing tools to empower companies to measure and manage their water use. Once your company has a sense of its water use, other questions to ask yourself are:

  • Does our company operate in drought-prone regions?
  • How do we manage water? Who has oversight?
  • Might any of our suppliers be at risk for water shortage?
  • What reputational risk could be associated with water shortage for our company?

Tools

CDP – The organization known for collecting GHG emissions data from the world’s largest companies is developing a similar program to collect water data. CDP now issues an annual water survey on behalf of 530 investors representing $57 trillion in assets. While the survey is currently focused on the largest water users, it will likely expand in the coming years.

Pacific Institute – As a nonprofit research institute that focuses on global and regional fresh water issues, the Institute serves as the “operational arm” of the United Nations (UN) CEO Water Mandate, launched by UN Secretary-General in 2007. Their Water Action HUB  is an ambitious and valuable effort to bring together tools, frameworks and case studies from around the world.

WBCSD – Launched in 2007, WBCSD’s Global Water Tool (GWT) is a free tool for companies and organizations to map their water use and assess risks relative to their global operations and supply chains. More than 20 WBCSD members formed an advisory group, led by CH2M HILL, to develop and provide oversight and pilot testing of the GWT. Expertise was provided by The Nature Conservancy and the Global Reporting Initiative.

Water MAPP (AT&T/EDF) – This past year, AT&T* and Environmental Defense Fund undertook a project to examine water efficiency in cooling towers. The result was a Water MAPP toolkit that could save companies 28 billion gallons of water collectively if deployed across the United States. (*client)

Global Environmental Management Initiative (GEMI) –  Made up of corporations, GEMI has created the GEMI Local Water Tool™ that  helps companies and organizations identify the external impacts, business risks and opportunities related to water use and discharge at a specific site or operation.

Water – Is Your Company at Risk?

The consulting firm McKinsey & Company predicts that in just 20 years the demand for water will be 40 percent higher than it is today. Companies – many of which have operations that rely on cheap, plentiful, clean water – will undoubtedly be impacted. If you think your company will not be impacted by this issue, you might need to think again.
These messages were broadcast loud and clear last month at World Water Week, a forum held in Stockholm, Sweden where individuals and organizations gathered to talk about how water is used, why water supply is threatened and what can be done about it.
Several global companies attended the event.   Representatives from beverage to apparel companies spoke about their efforts to …

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