Consulting firm McKinsey & Company predicts in just 20 years the demand for water will be 40 percent higher than it is today. Companies that rely on cheap, plentiful and clean water will undoubtedly be impacted.
These messages were broadcast loud and clear at World Water Week, a forum where individuals and organizations gathered in Stockholm, Sweden, in September 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. From beverage to apparel, representatives spoke about their companies’ efforts to understand and manage water risks and opportunities. The unique thing about water, which makes it different from carbon, is that water is a very industry- and region-specific issue.
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 products 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 threatened not only cotton growers, but also raised prices for companies such as Levi Strauss and Gap.
Companies that depend on water in their manufacturing process are also wise to understand their water-related risk. Beverage companies top this list, but other industries such as biotech, metals and mining and energy are also relevant here.
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 energy needed to pump and transport water, sanitize water, discharge, and 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. As a consumer, you can use these tools to find out how your favorite companies are addressing water risk. Several companies also report on this topic in their annual sustainability reports.
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 – A nonprofit research institute that focuses on global and regional fresh water issues, the Institute serves as the “operational arm” the United Nations (UN) CEO Water Mandate. Their Water Action HUB is an ambitious and valuable effort to bring together tools, frameworks and case studies from around the world.
Jen Anderson leads the sustainability reporting practice at VOX Global, a communications firm specializing in designing, developing, and promoting corporate social responsibility and sustainability programs for leading corporations.