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3rd July 2020

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Water security is the poor relation of the climate emergency when it comes to industry attention, says Catherine Early

Water shortages are life threatening. They are already leading to food insecurity, conflict and migration, and are now aiding the spread of COVID-19 in regions where many lack handwashing facilities. But water is also a business risk. 'Water crises' has been listed as a top five global threat in the World Economic Forum's global risk register every year since 2012. Industry currently withdraws almost 20% of the world's freshwater resources, and this is projected to grow to 24% by 2050, according to the UN's World Water Development Report 2020.

Water demand is likely to outstrip supply by 56% by 2030, according to the World Resources Institute (WRI). Decreasing water quality will exacerbate this by limiting the amount that is suitable for use – an estimated 80% of municipal water is discharged without treatment.

Business at risk

Supply chains have already seen the impact. Last year, droughts saw mining company Anglo-American suffer a 28% drop in copper production in Chile; in Chennai, India, large companies had to pay 30% more for water to be trucked to their offices and factories, and the city's Chamber of Commerce said its members were reluctant to invest in expansion due to supply uncertainty.

The Carbon Disclosure Project (CDP) has been asking businesses to disclose their water risk since 2010. In this year's report, 90% of mineral extraction companies reported identifying water risks with potentially substantial impacts. For power generation companies, the figure was 79%; for food, beverage and agriculture companies, 55%; for manufacturing companies, 42%; and for the service sector, 23%. Of those reporting exposure, the combined business value under threat was estimated at US$188-425bn, though that is likely to be an underestimate given that only half of responders gave a value. Some 40% of risks were anticipated to hit within one to three years.

A Cinderella issue

In the main, businesses have been slow to act. Companies failing to disclose in 2019 outnumbered those that did, and the number disclosing risks on water is nearly four times lower than the number disclosing climate risks.

Water security is still a 'Cinderella issue' compared with climate change, says Cate Lamb, CDP's global director of water security. She cites lower pressure from institutional investors, and a lack of investor-related campaigns on water.

Emilio Tenuto, senior vice president of sustainability at water and energy technology firm Ecolab, says business awareness is growing. Ecolab is a founding member of the new Water Resilience Coalition under the UN Global Compact (UNGC), which aims to build the resilience of water-stressed basins by prioritising those posing the greatest risk.

Signatories must commit to: a net-positive water impact, in which they contribute more to basin health than they take from it, and a water-resilient value chain. The UNGC is working with organisations such as The Nature Conservancy and the WRI to draw up metrics to assess companies' progress, says Mai-Lan Ha, UNGC senior advisor at the CEO Water Mandate initiative.

The time is ripe for launching the coalition in order to raise the profile of the issues and achieve tangible progress, says Ha. The CEO Water Mandate now has 170, but a tipping point in business's understanding of water security has not yet been reached. Businesses really need to work together on water, as it is a problem that very specific to local areas, Ha continues. “Companies can be as efficient as possible and still face significant risk because of the local conditions, so it requires a lot more engagement with external stakeholders in local areas to drive change.“

Joining the dots

Another challenge, according to Tenuto, is a disconnect between corporate level, where targets are set, and facility level, where savings must be achieved. A 2019 survey of 86 companies with revenues of at least US$1bn, carried out by Ecolab and media company Greenbiz, found that while 59% said water security was a growing business risk and 88% said they would actively monitor water use in the next three years, 44% said they had no plan in place to achieve this.

Tenuto is optimistic that businesses have begun to connect water with climate mitigation efforts. “It takes energy to move water around, or to condition it, or use it in operations. If you can reduce your water use, that also reduces your greenhouse gas emissions and climate change impact,“ he says. Lamb agrees. “If you've failed to deal with water, you've failed to deal with climate,“ she says.

The AWS Standard

In 2014, the Alliance for Water Stewardship (AWS) – a global organisation whose membership includes businesses, campaign groups and the public sector – launched the AWS Standard to establish a framework for sustainable water use. Companies seeking certification agree to gather data, create and implement a water stewardship plan, evaluate performance and disclose progress with stakeholders. Sites are independently audited.

More than 70 sites have now met the standard, with owners including Nestl√© Waters, Coca-Cola and Ecolab. “The types of businesses who use the standard and engage with us are broadly speaking food and beverage production businesses, retailers and their agricultural supply chains,“ says Scott McCready, AWS director of outreach and engagement. Several sites operated by micro-electronics companies and their supply chains in China and south east Asia have also achieved certification.

“People are realising that water is a catchment-based issue, so their awareness has risen from internal efficiency focus, through to wider catchment-based realisation that their business is only part of the solution,“ he says.


Ecolab, Louisiana, USA

Ecolab's plant in Garyville, Louisiana was AWS certified last year. It is dependent on water pulled directly from the Mississippi River and treated on-site, and has reduced its water use by 159m litres a year through projects such as recycling wastewater and improving the efficiency of condensate return and the cooling tower. It also worked with The Nature Conservancy to reconnect the river with its historic floodplain, benefiting wetland habitat and local communities. The project has vastly increased the volume of water available to the plant. “It's an 'and', not an 'or' – you have to both reduce withdrawal into your facilities by driving efficiencies, and work with the wider community to improve supply,“ says senior vice president of water sustainability Emilio Tenuto.

Tata Chemicals, Gujurat, India

Tata Chemicals is a CDP A-list rated company on water security. Its improved recycling and water management led to a 98% reduction of third-party water use and a 99% reduction of groundwater use at its soda ash plant in the drought-prone state of Gujurat.

One of its main measures to cut freshwater use was building a number of desalination plants to transform surrounding seawater into freshwater. Building the infrastructure was expensive, but the firm sells the salt produced to offset the cost, explains Alka Talwar, the firm's chief corporate social responsibility and sustainability officer. “It's much cheaper to take water off a lake than to build a desalination system, but the fact that we could come up with an alternate product addressed the issue of cost,“ she says.

Catherine Early is a freelance journalist

Image credit: iStock


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