Published 6 months ago.
About a 5 minute read.
Image: Quang Nguyen Vinh
Adequate water-stewardship goals must address the full range of water issues across the value chain — including amount of water used, impacts on water quality, ecosystem health and communities’ access to safe water.
Today, two-thirds of the world's population faces water scarcity every
year. Meanwhile, the
United Nations estimates more than 100 countries are not on
to have sustainably managed water resources by 2030.
While these statistics reflect the vastness of the global water crisis, they
mask the magnifying impacts increasing climate change, pollution, population
pressure and other factors have in different water basins across the globe.
These intricacies present additional challenges for companies that are concerned
about threats to business continuity and looking for guidance on how to navigate
the myriad of water issues threatening their bottom lines.
Business leaders are among stakeholders gathering this week for World Water
Week, the leading annual conference on global
water issues, in Stockholm, Sweden. As with the UN
Water Conference in March, this
week’s convening will include many discussions around the private sector’s role
in addressing the world’s greatest water challenges.
Industries are major contributors to the water crisis — driving critical threats
to global freshwater systems including groundwater depletion, metal
contamination, plastic pollution, water diversion and transfer, and
Examining the financial risks of these water impacts reveals their material
significance. In fact, Ceres analyses found the cost of addressing harmful
water impacts could top nearly $1.8 billion annually for some large publicly
companies, and lead to a change in company valuation of up to -47 percent.
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Some companies are taking notable action. Beverage company
Diageo has a commitment to replenish more water
for operations in 100 percent of sites in water-stressed areas by 2026. The
company has also committed to reduce water use in its operations, with a 40
percent improvement in water-use efficiency in water-stressed areas and 30
percent improvement across the company. Meanwhile, Levi
Strauss conducts an annual water-risk
of its facilities and supply chain and categorizes its facilities into areas of
low, medium and high stress. Consequently, it has set a 2025
to reduce freshwater use in its manufacturing by 50 percent in areas of high
Food company Mars is among companies addressing complex
water issues by partnering with
in water-stressed basins. The company assesses water
across its direct operations and throughout its global agricultural supply
chains. For example, Mars knows the specific farms, growing regions and country
of origin for 100 percent of its rice supply and has calculated the percentage
sourcing from water-stressed areas.
These actions are encouraging; but bolder, broader goals are needed to avert the
financial consequences facing industries that do not manage water better. These
goals must address the full range of water issues across the value chain —
including how much water companies use, their impacts on water
ecosystem health and communities’ access to safe water. That's why investors are
taking notice and urging companies to improve their water-stewardship practices.
More than 90 investors have committed to engage more than 70 focus
with large water footprints through the Valuing Water Finance
making the business case for companies to elevate water risk to the forefront of
risk management and planning. These investors, who collectively manage more than
$17 trillion in assets, have laid out a set of six corporate water
for companies to meet in order to address their broad water impacts by 2030.
The results of a benchmark analysis, slated to be made public later this year,
uses existing publicly available company disclosures to assess water commitments
and practices across the six corporate expectations for large companies from
four water-intensive industries —
and tech. The benchmark will inform investors’ engagements with the companies,
and help companies identify areas of strength and where more urgent attention is
As our experts review public disclosures for the forthcoming benchmark analysis,
we are assessing leading practices — such as how companies are:
Ensuring water-risk assessments are comprehensive and targets include
material parts of the value chain.
Setting strong targets — focusing on the processes and actions needed to
drive impact and address shared water challenges especially in high-risk
Encouraging their suppliers to adopt sustainable water-management practices
that include strategies to improve water quality, responsibly source
materials and collaborate with other stakeholders on shared challenges.
Implementing integrated approaches tying water to climate and biodiversity
goals, and communities’ access to water and sanitation. Recognizing the
interconnected nature of these issues can help companies leverage the
synergies between water-related issues and other environmental and social
challenges for multiple benefits.
Focusing on collective action in a basin to drive progress on shared water
by collaborating with suppliers, local communities, NGOs, government
entities, and industry associations to foster partnerships and share best
Advancing and aligning advocacy and lobbying efforts to support
water-friendly policies and industry standards to promote positive, systemic
Ensuring boards and senior management consider water risks and opportunities
as part of business planning and investment decisions for their assets and
supply chain — integrating them into decisions on strategy, risk and
For decades, we’ve seen great progress by the private sector in addressing
climate risk as a material financial risk. We call on investors and companies to
address water risk with the same urgency and drive the necessary action by
addressing broad, interrelated water impacts. Water is a shared resource, so
companies must use their sphere of influence to bring other stakeholders into
the fold, making the collective inroads needed to ensure a water-secure future
for the long term.
Published Aug 21, 2023 2pm EDT / 11am PDT / 7pm BST / 8pm CEST