Business continuity depends on access to clean water, a resource that is in higher demand as scarcity increases, quality declines, and distribution remains unequal around the world. As more companies recognize their dependence on clean water, they are turning to different tools to assess risks and provide context for their direct operations and supply chains.

While there are now more tools available to evaluate corporate water impact and risk, water is such a complex issue that it is difficult to capture all relevant issues using one tool, or even a suite of tools. The distinct outputs from the tools should be placed in the context of organizational and stakeholder priorities. By using water-related risk information for other corporate objectives, companies can develop responses that maximize resource use and increase value for multiple sets of stakeholders.

Getting Started With Tools

In the past three years, the number of publicly available tools has increased substantially for a variety of audiences. Some tools for the private sector, such as the Global Environmental Management Initiative’s (GEMI) “Collecting the Dots: A Water Sustainability Planner,” help companies understand impacts and risks at a site level, while other tools, such as the World Business Council for Sustainable Development’s (WBCSD) “Global Water Tool,” show high-level physical risk across a company’s entire business. Tools for investors, such as CERES’ “Aqua Gauge,” focus on water risk based on a company’s management practices. In addition to these tools, water footprint methodologies, such as that of the Water Footprint Network, help companies gain a better understanding of their water impacts at a company or product level.

These tools and methodologies are designed to help companies and investors begin to understand water impacts and risks, but they do not put those risks in context: What are the implications of water use on other factors, such as human health, community access to water, and ecosystem health?

By understanding the interdependencies of water, companies can move beyond pure reduction targets and consider how the issue relates to broader organizational objectives. Companies can use water-risk information gleaned from tools in two different ways. First, by improving their understanding of the geographic and external context of the watersheds where operations or supply chains exist, companies can look for new collaborative approaches to manage a range of environmental and social impacts. And second, companies can share water-risk assessments with other internal teams that may be able to incorporate the information into their own goals and activities. And where there is common interest, there is an opportunity to share resources—financial, human, and intellectual.

Shaping New Collaborative Approaches

Water sits at the nexus of many global challenges. Efficient agriculture, human health, vibrant cities, and individual livelihoods all depend on clean water. Looking at water in this way, it’s easy to see how, in any given watershed, there are multiple users of water—communities, farmers, industry, and government—who each need water for a different reason. At the same time, the environment itself is an important user of water.

To help reduce risk in water-stressed areas, companies need to start by understanding how each of these actors use and impact water. Companies can then convene those stakeholders to discuss potential solutions and pool resources to fund solutions. In many cases, this plays out in the form of water funds or payments for ecosystems services, where financial, human, and technological resources are invested to address negative water impacts at the source. Common investments include installing fencing and buffer strips near streams and riverbanks, training farmers on more sustainable agricultural practice, installing drip irrigation systems, and training communities on basic health and sanitation practices.

However, technological and behavioral improvements alone will not create sustainable solutions. Water quality and equitable allocation require effective governance. Companies (preferably in coordination with the other stakeholders in the watershed) should work with local, regional, and national governments to develop more effective public policy and governance of water resources.

Integrating With Other Corporate Objectives

While water-risk tools are generally conducted by environmental sustainability mangers, a water-risk assessment may provide useful information to other internal teams:

  • Human rights: The UN Guiding Principles offer a framework for companies to “operationalize” respect for human rights, and in 2010 the UN declared the “right to safe and clean drinking water and sanitation as a human right that is essential for the full enjoyment of life and all human rights.” As companies begin to map their portfolio of activities against all human rights to identify risks and opportunities, information from the water-risk assessment can be incorporated into this due diligence to inform the human rights strategy and action plan.
  • Sustainable development and strategic philanthropy: To some extent, water is a factor of production in all business. It’s also a critical resource that impacts surrounding communities in different ways. Improved nutrition and sanitation reduces susceptibility to diseases, access to electricity is key to improving the quality of life, and increased food security reduces political and social instability. Almost all business sectors have devoted substantial resources toward sustainable development, in the form of local benefits programs, philanthropic donations, or strategic collaboration with key NGO partners. All of these programs could benefit if their managers developed a better understanding of the company’s dependencies and impacts on local water resources.
  • Value chain: In addition to investing in supplier practices to promote water efficiency and wastewater treatment, many companies have an opportunity to extend water stewardship to consumer use (and disposal) of products, which have a significant impact on water, as does general consumer awareness of the value of water. Design, branding, and communications teams can play a key role in building awareness and changing consumer behavior on product use, recycling, and proper disposal.

By taking a step back to understand the bigger picture, companies have an opportunity to use an effective water strategy for collaboration—with internal and external stakeholders—on sustainability solutions beyond just water. Companies that embrace the complexity of water will maximize their resources and develop goals and objectives that have a greater impact on water availability and business continuity—creating a much more compelling story in the end.