The Business of Sustainable Water Management

According to a 2011 study, global warming will diminish global supplies of fresh water. Although these findings focus on urban centers in South America, it is likely that we will see more widespread water loss due to evaporation caused by warmer temperatures. In the U.S., water problems associated with climate change are not a problem of the future. The drought of 2012 reveals that we are already experiencing the effects of a warming planet.

A report from the 2030 Water Resources Group (PDF), including the International Finance Corporation and McKinsey & Company, found that the world faces a 40 percent global shortfall between forecasted water demand and availability by 2030.

Agriculture takes up most of human water use and groundwater levels have already dropped in the western U.S., according to a pair of studies of satellite gravity monitoring data conducted by researchers at the University of California Center for Hydrologic Modeling in Irvine, Science News reports.

Farmers in California’s Central Valley, which accounts for nearly 1/6 of irrigated land in the entire country, pump nearly 4 cubic kilometers of water per year out from underground. In addition to farming, dams and channelization are two pervasive threats to freshwater ecosystems today.

Some of the main causes of marine pollution are nitrogen dioxide, sulfur dioxide, ocean acidification, ozone depleting substances, dredging, rising sea levels, ocean dumping, pollution from cruise ships, marine debris, noise pollution from ships, oil spills and plastic.

NGOs and Government

As reported by Environmental Leader, there are numerous foundations working on water issues. They include the World Resources Institute, CERES, the Gates Foundation, One.org, the Johnson Foundation at Wingspread, Water.org, and the Safe Water Network.

In 2007, the UN Secretary-General launched the Global Compact’s CEO Water Mandate, a public-private initiative designed to assist companies in the development, implementation and disclosure of water sustainability policies and practices. The CEO Water Mandate seeks to build an international movement of committed companies, both leaders and learners. In this spirit, it is open to companies of all sizes and sectors.

The U.S. government is also involved in water issues through agencies like the U.S. Department of State, USAID, the US Department of Commerce, the US Department of Agriculture and the US Environmental Protection Agency. In February 2012, the US Department of State convened a roundtable to discuss forming the US Water Partnership. The partnership coordinates divergent water efforts among industry, NGOs and US government agencies.

The 2030 Water Resources Group (WRG) is working to foster collaboration between the public and private sectors that create sustainable solutions to water scarcity.

Business

Jonas Kron is an investment adviser at Trillium Asset Management, he worries about the business of water. Trillium focuses on environmentally sustainable investments, and he is concerned that the $900 million fund that he manages will be impacted by the world’s dwindling supply of fresh water. However, Kron believes that most companies will eventually realize they need to factor climate change and water risk into their bottom line.

It is becoming increasingly obvious to many businesses that there is not an infinite supply of clean, usable water. Many corporations are cutting back on water consumption. A number of large multinationals are actively engaged in water management issues.

In 2010, the U.S. Securities and Exchange Commission required publicly traded companies to disclose water related issues. According to the 2011 CDP Water Disclosure Global Report 2011, more companies view water as a business opportunity (63 percent) than a risk (59 percent). The opportunities range from the savings realized by using less to potential new products and services. Nearly 80 percent see those opportunities impacting business in the next five years.

A 2010 Ceres survey found that 39 percent of 150 respondents had already experienced negative water-related impacts. They included disruption to operations from drought or flooding, declining water quality that required costly on-site pretreatment, increases in water prices, and fines and litigation relating to pollution incidents.

A June 2012 report from Ceres said Anheuser-Busch InBev, Coca-Cola and Pepsi are among the 27 percent of companies that see the connection between climate change and water risk.  As reviewed in a 2012 Environmental Leader report, big beverage companies including Coca-Cola, PepsiCo, Miller and MolsonCoors have identified long-term water supply as a risk.

In 2006, the Beverage Industry Environmental Roundtable was created to address water and energy issues. USA Today has indicated total amount of money invested in water conservation projects by beverage companies over the past five years at more than $500 million.

In 2010, Coca-Cola estimated that its facilities have reused more than 2,294,000 kiloliters of rainwater or treated wastewater. About 39 percent of Coca-Cola facilities have indicated that they reuse water before or after treatment. Coca-Cola has developed a beverage process water recovery system that can reduce a manufacturing plant’s water use by up to 35 percent. The company has pledged to improve water efficiency a total of 20 percent by the end of 2012, compared with a 2004 baseline.

In 2011, Pepsi met its goal of improving water use efficiency 20 percent by 2015, compared with a 2006 baseline. Pepsi also says it will provide 3 million people with access to clean drinking water by 2015.

The Dr Pepper Snapple Group has pledged $1 million over the next four years to protect Texas watersheds that provide water for its bottling plants. By 2015, Dr Pepper plans to cut water use and wastewater discharge 10 percent per gallon of finished product, compared to 2009 levels.

IBM treats and converts millions of gallons of water in their Burlington, Vermont, semiconductor plant and between 2000 and 2009, it cut water usage by 29 percent, saving $3.6 million per year. Ford Motor Co. cut water use by 62 percent between 2000 and 2010; now the company hopes to cut use by another 30 percent over the next three years. Sun World, a Bakersfield, Calif.-based fruit grower, redesigned its irrigation system and lowered water consumption by nearly 9 percent.

Nike has committed itself to a 15 percent improvement in water use by 2015 as compared to a 2011 baseline. A Google data center in Georgia is conserving up to 30 percent of the water it uses with the help of a reuse system.

Another Environmental Leader article reports that water was an important issue at the Rio+20 Earth Summit. CEOs from Coca-Cola Company, Pepsico, Levi Strauss & Co., Royal Dutch Shell, Unilever and 40 other international companies agreed to set targets on their own water efficiency and wastewater management in factories and operations, and called on governments attending to make global water security a top priority.

In an initiative known as the Global Compact’s CEO Water Mandate, companies have pledged to work with suppliers to improve their water practices, and partner with nongovernmental organizations, UN agencies, governments and public authorities, investors, and other stakeholders on water-related projects and solutions.

Solutions

According to a United Nations Environment Programme (UNEP) report, cleaning and managing our seas could reduce pollution and boost economic growth.

Early in 2012, the Hill reported on the Obama administration’s ocean-protection strategy that outlines steps for federal agencies to meet the goals of a 2010 executive order. The plan includes improved spill response capabilities in the Arctic; an assessment of the impacts of climate change (including sea-level rise); improved management of ocean ecosystems; increased reliance on science and data; and increased collaboration with stakeholders and agencies.

Another valuable approach to reducing ocean pollution comes from preventing fertilizers like nitrogen and phosphorous from reaching waterways. Cleaner fuels and more energy-efficient ship designs could also help cut emissions from the maritime industry. Better irrigation systems would help to reduce water usage and channel water runoff into aquifers.

Businesses are increasingly employing the standardized methodologies used in a corporate water strategy:

• Step 1: Know your water sources, use, consumption and discharge for all operations. Benchmark operations, set targets and drive efficiency.
• Step 2: Establish a cross-functional water team to define a viable three-to-five-year water stewardship vision that is measurable and aligned with overall business goals.
• Step 3: Complete a baseline water risk assessment to understand and compare local watershed conditions beyond the four walls of each facility.  Examine risks and opportunities including physical, regulatory and reputational.
• Step 4: Develop, implement and maintain local water management plans (e.g., location or site specific) based upon Step 3 results. Incorporate performance monitoring systems and issue escalation processes.
• Step 5: Engage with supply chain partners to understand your company’s broader water footprint, impact and opportunities.
• Step 6: Strategically engage with external stakeholders through partnerships, reporting and other related efforts.

Businesses are benefiting from the greater availability of data, tools, and best practices. Corporations are increasingly taking stock of the risks and opportunities posed by water, and they’re also becoming more adept at collecting and reporting water data.

Water issues are slowly working their way up the corporate sustainability agenda and emerging as a core business issue. Companies without sustainable water management practices risk having restricted access to capital, high loan rates, and inflated insurance premiums.

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Richard Matthews is a consultant, eco-entrepreneur, green investor and author of numerous articles on sustainable positioning, eco-economics and enviro-politics. He is the owner of The Green Market Oracle, a leading sustainable business site and one of the Web’s most comprehensive resources on the business of the environment. Find The Green Market on Facebook and follow The Green Market’s twitter feed.

Image credit: L.Richarz, courtesy flickr