A watertight case

Switched-on businesses know about the importance of climate change.

But increasingly they also know about the importance of water. Or rather, its scarcity. Water shortage is a tragedy for people, affecting their every-day life, health, education and income. For business it’s also about how a lack of water can hit corporate profits, a company’s public relations image and – if the underlying problem is bad enough – your on-going business model and the future of your company.
 
It sounds obvious, of course, in a world decimated by not just droughts but, increasingly, floods and rising sea levels. Anders Berntell, Director of the Stockholm International Water Institute (SIWI), sees a far greater awareness of the issue, especially in the business environment, but would like to see more.

“Business,” he says, “has started to realise the fundamental role of water for economic development. From a business perspective, an increasing number of companies can see how vulnerable they are to their dependency on water, particularly manufacturing industries. The food and fibre industries are hugely dependent on water.” Food, in fact, is a huge consumer of water. It’s estimated that irrigation takes around 70 percent of all water used. Which means using less water to grow food is increasingly important.

Companies like Nestlé have been taking a lead on the issue for some years says Berntell. “They’ve addressed it in a very structured way, I would say. Other companies in the food business, soft drinks and textiles are also increasingly opening their eyes to the challenges,” he says. But it is clear in Berntell’s tone of voice that the speed of progress is nowhere near fast enough for many.

Everyone’s connected
A big part of the problem is that too many companies don’t realise their innate dependence on this precious, often taken-for-granted resource. “I remember,” recalls Berntell, “talking to one company – an IT firm – who it said it could quite clearly see the importance of water for many businesses, but because their business was IT, they had no real connection with it. But in fact it takes a lot of water to make micro-processors and it also requires water of very high quality, very clean water.”

The financial sector is a huge industry in the US and UK (and increasingly so in Asia and mainland Europe as more of us buy into private pensions and look for alternative investment sources as interest rates drop ever lower). “It too has started to wake up here,” says Berntell. “Insurance companies, for example, are now very advanced in assessing risks from a water perspective. In general, many are more interested in understanding their connection to water.”
That goes too for people like fund managers who have the responsibility of allocating where money is invested in their portfolios. In some parts of Europe, governments are increasingly insisting that large public sector pension funds direct their resources towards sustainable “green” and “water-wise” projects, representing a substantial degree of investment. 

Finding the formula
There remain several stumbling blocks to promoting more water awareness on the business front. One of the drawbacks is an internationally agreed formula for calculating a company’s own corporate water footprint. Berntell says a number of international networks are trying to develop methodologies to do this, but it’s a very complex undertaking to take on. “It’s a field, yes, that’s under development,” says Berntell. “And there’s also a lot of interest in it. But you also may have to apply different methodologies, in some instances, for different industries, as well as extract different levels of detail.”

Then there are other companies who have decided to work towards a new labelling system and a better understanding of their own impact on water. “Some companies that do calculate their water footprint are involved in a stewardship alliance, another way of addressing the challenges, developing structures, like the Forest Stewardship Council (FSC).” But a tried-and-tested formula for all industries? That’s still a long way off.

Joined-up thinking
The more governments make the connection between their relationship with water and economic growth the better, says Anders. “Water is a prerequisite for economic growth. We know from looking around other parts of the world that a lack of water or bad water management has a huge impact on countries’ economies and prospects for growth.”

The most obvious is effects of inadequate sanitation and its effect on health and general operational safety. Many dangerous, virulent diseases are water-born. That means getting basic infrastructure and sewage right. Think of the consequences of polluted water and the tourist sector. When you have really bad water, tourist rumours spread fast, especially in cyberspace.

But what Berntell wants to see is more government-driven programmes that in turn also generate more private investment.

Water is a unique resource; there is no substitute for it. Which means there are huge opportunities too for business, as well as huge contradictions and risk. Water is a valuable  resource, without which hardly any economic activity can exist, yet its global provision is hugely unbalanced across the world. How, then, will your company behave?