Water is a powerful resource for people, communities, agriculture and business operations, supporting us in our daily lives and meeting critical business needs. With oceans covering three-fourths of the earth’s surface, water appears abundant. However, oceans can only serve limited purposes for most needs, while clean, freshwater supplies are critical.
Water stress and scarcity research shows how these resources are becoming increasingly scarce. Today, 4 billion people face severe water scarcity at least one month out of the year. By 2050, the global population could rise to nine billion and water demand could increase by an estimated 55%.
Given the strategic importance of water to business, global water risks have received increasing attention from businesses. CDP water questionnaire data from 2022 shows businesses have plans to invest $79 billion dollars to reduce water risks. Among the 3,909 companies responding to the questionnaire from investor requests, 58% are actively maintaining or reducing water withdrawals and 63% have undertaken water risk assessments.
Causes of water risks
We’re seeing various factors contribute to the high water risks around the world. Climate change causes water stress by creating prolonged drought conditions and lower annual rainfall that are directly attributable to the rise in global average temperatures from burning fossil fuels. Some of the less expected ways it contributes to freshwater scarcity are from mudslides and storms that contaminate freshwater supplies.
Climate change is only one side of the story. The world’s overall consumption of water has increased significantly. By 2040, experts warn that global freshwater demand is expected to surpass available supplies by 40%.
Finally, water management also plays a role, both at the private business and government levels. Freshwater is a shared resource that supports a wide variety of activities: agriculture, private industries, hydroelectric power generation, public municipalities operations and communities’ drinking water and recreational areas. Balancing the needs of all of these groups has historically challenged governments whose management approaches have tapped out water tables in many areas.
This is an increasingly debated dilemma for the Colorado River Basin, where seven affected states have been ordered by the U.S. Bureau of Reclamation to cut their collective use of river water by 15% to 30% annually to replenish water reserves. The basin supplies 40 million people with water and irrigates 6 million acres of farmland. In this case, the year-long deadlock for distributing responsibility among the Western States shows the complexity of water-related decision-making.
Water management that prevents worst-case scenarios and allocates water resources fairly plays a significant role in ensuring the longevity of water supplies for everyone.
Corporate water stewardship
Companies worldwide have a role to play in ensuring a sustainable water supply remains available for future generations. As a shared resource, it is essential for corporations to develop sound policies for ensuring water stewardship in their communities. Businesses are also responsible for managing water risks to avoid adverse financial impacts on their activities, such as asset stranding in key resource-intensive sectors (oil, gas, coal and mining).
In 2023, Ecolab Watermark compiled survey responses from consumers around the globe about water resources. Its results show that in the US, 60% of consumers strongly or somewhat believe “businesses lack clear guidance and/or plans to combat water scarcity,” and 37% have “stopped using or purchasing products because of how much water it takes to manufacture them.” More companies are using incentives to increase their corporate engagement in water targets. CDP reports that more than 1,000 companies in 2022 linked annual CEO performance reviews to achieving water goals.
Typically, the first step to addressing water risks and scarcity is establishing a policy commitment and a water management approach. Innovative approaches to addressing water risks through services or products can also present business opportunities.
Implementing a water strategy can include a range of approaches including:
- Internal water resource management
- Target setting
- External partnerships and community engagement
- Training and awareness-raising for employees, customers and suppliers and either financing or marketing water saving technologies
Before developing a water management system, it is important to understand which assets of a company are located in geographic areas with the highest water stress and scarcity risks. This is because water risks are highly dependent on local conditions. Companies can identify their local risks using the World Resources Institute Aqueduct tools, such as the Water Risk Atlas.
To make at-risk operations and assets easier to track and monitor, Atrius Sustainability enables companies to tag all of their buildings located in water-stressed areas. Companies can then visualize their locations using the built-in mapping tools. Our tools allow users to set buildings into groups to manage and track multiple buildings collectively. By identifying and prioritizing these assets, companies can focus their efforts on the areas of greatest concern.
In addition to identifying water stressed areas, businesses should plan to measure, track and monitor their water consumption and use. It is important for businesses to establish a baseline year and establish a routine process to collect and assess water use data on an annual basis.
Atrius Sustainability is designed for businesses to correctly track and monitor complex water uses by type and visualize the data at any level of detail, whether it’s the corporate or building asset level.
Setting and pursuing water targets
The Science-based Targets Network has recently developed and launched the world’s first methodology for setting freshwater targets aligned with scientific research on global water supplies. Similar to the Science-based Targets Initiative (SBTi) for setting carbon emissions targets, the water target setting initiative considers the entire value chain of a business for assessment purposes. This means considering the impacts on water both upstream (during production and shipping) and downstream (during product or service use and disposal) of a company’s own operations.
In its initial draft, the main steps for water assessment are as follows:
- Assess nature impacts
- Assess value chain impacts
- Set targets by location
- Assess nutrient pollution impacts on water
- Establish company-specific targets
Companies may use contextual (local or regional) targets when bespoke target-setting is difficult to achieve. In the future, it is likely that the assessment of pollution won’t only be limited to nutrient pollution. The SBTN has prioritized this in the initial draft, given its outsized impact on water.
Corporate water strategies
There are plenty of ways for companies to identify innovative approaches to addressing water risks. With plenty of opportunities, it is critical for companies to track and monitor their water savings at the project level.
While water saving faucets and toilets designed for water efficiency can lower water use, adding to water supplies is another option through rainwater capture or wastewater reuse technologies. Changing manufacturing and industrial processes is another way to either reduce freshwater withdrawals or minimize the rates of industrial pollution entering waterways. Scaling approaches from direct operations across supply chains is another way companies can significantly expand their impact.
Water strategies can broaden to more holistic approaches that consider the interactions of climate change, biodiversity and water use at once. Nature-based solutions such as forest restoration aim at tackling these multiple issues, while also supporting local communities.
Water use transparency and disclosure
While it is very commendable for companies to commit to reducing global water risks, an important way to “walk the talk” of these commitments is by internally assessing operational water use. This supports internal and external decision making about a company.
Internally, measuring water can lead to cost-saving efficiency improvements. It can also help companies adopt innovative problem-solving approaches and minimize their long-term risks.
Collecting and reporting water data also helps companies demonstrate their commitment to addressing sustainability risks. It also supports stakeholders’ interests when companies transparently report their corporate water use data.
For more information on reporting guidelines for water check the following guidelines:
- CDP’s water questionnaire
- Carbon Disclosure Standards Board guidelines on water
- GRI’s topic standard on water and eflluents
Atrius Sustainability offers a central location to manage water data, which supports portfolio- and building-level water use and risk management. Our platform can centralize water data inputs including water utility invoices and interval sub-meters for real-time data. Atrius can also build dashboards specific to tracking water consumption and reduction. Schedule a demo to learn more.
