Water security – what does it mean for my value chain?
After a grey summer in the UK, many businesses might be forgiven for not having water issues at the forefront of their minds. However, looking at the broader picture, it is clear that 2021 was a year of watery extremes. Images of flooded subways in New York City shared on social media last month followed harrowing stories of famine in drought-stricken Madagascar, and all the while wildfires have continued to wreak havoc across Europe and North Africa.
Suffice to say, the physical impacts of water-related risks – whether that be from too much or not enough of the stuff – can be ruinous for businesses. Add to that the potential reputational damage to organisations associated with exploitation of community resources, or the regulatory and litigation risks associated with costly breaches of contract, and you may have a considerable responsibility on your hands.
Of course, not all industries have the same material dependence on water as, say, agricultural or extractive sectors. But there are few industries with no roots whatsoever drawing water into the value chain from somewhere or other. In fact, a ground-breaking new tool shows just how interlinked over 200 industrial activities are with water, including retail, manufacturing, hospitality, and food producers – and the results might surprise you.
So as businesses in all sectors wake up to water risk, ask yourself: should I be doing more? Research by CDP in 2021 has shown that businesses are exposed to as much as US$300 billion in water-related risk, yet the cost of responding to that today is just a fraction of what it could be tomorrow. Championing the equitable use of water, in ways which are both environmentally sustainable and economically beneficial, can help reduce risk and open up new opportunities for your business.
Take the example of a pulp and paper producer. Water is used to remove impurities throughout the process and, as a result, industrial mill effluent carrying hazardous organic substances may persist in the downstream environment for many years. Timber plantations and deforestation also post a significant risk for water security; in the worst-case scenario, forestry operations require vast tracts of land to be converted to non-native monoculture. For a paper mill, to not consider water security as a vital part of its business strategy in 2021 would be rash at best (and arrogant at worst). For this reason, leaders in this industry have been turned on to the idea of water stewardship for many years, exploring concepts such as river basin partnerships and closed loop wastewater systems. But if you only buy forestry or paper products, it is less clear what the best course of action for you may be. How can you practise water stewardship when you don’t use it directly?
Fortunately, there are many ways this can be done. Certification schemes have long been in place providing a degree of confidence in the forestry practices that underline certain material production, such as by maintaining areas of high conservation value or providing ecosystem services such as water purification. Beyond that, buyers can also consider the geography of their procurement strategy by mapping their supply chain with tools such as the WRI Aqueduct Water Risk Atlas (remember, a litre of water in Namibia has far greater value than the same volume in Norway).
Engaging with your supply chain to better understand these issues is crucial – and you may be surprised to learn what initiatives are already in place. Schemes such as the Alliance for Water Stewardship recognise this and provide “a universal framework for the sustainable use of water through a corporate standard that drives, recognises and rewards good water stewardship”, and are increasingly used by top businesses to demonstrate their leadership on water. By committing to improving quality of and access to freshwater resources within a local catchment, businesses can demonstrate a forward thinking ‘beyond the fence’ approach. Examples of this may include constructing wetlands for wastewater treatment, implementing new land management practices to reduce soil erosion, or engaging with catchment stakeholders to protect shared resources. This is just one of the reasons why nature-based solutions feature so heavily in frameworks such as the Alliance for Water Stewardship.
According to the IPCC’s latest report (AR6, 2021), water problems such as droughts, wildfire and flooding are all likely to become far worse unless global heating can be brought under control. While it is undeniable that state actors and policymakers will be pivotal in determining how we respond to the challenges facing our shared freshwater resources, the role of the private sector should not be forgotten.
As many sustainability professionals turn their focus to COP26 later this year, they would do well to remember that the burden of climate adaptation will be felt most strongly on the shoulders of those most dependent on a water secure future.