More than ever before, business leaders realize that their long-term profitability – even viability – depends on the right quantity and quality of water available at the right time and place to meet the needs of people, business and ecosystems.
This business interest triggered the creation in 2008 of WWF’s Water Stewardship Program. To address the need for communication and assessment of potential water risks, we created the Water Risk Filter with DEG, the German development finance institution.
We define water stewardship for business as a progression of increased improvement of water use and a reduction in the water-related impacts of internal and value chain operations. More important, it is a commitment to the sustainable management of shared water resources in the public interest through collective action with other businesses, governments, NGOs and communities.
We are excited by the increased interest in water from business and appreciate that good stewardship does exist. Yet, we are witnessing a mixed response from many companies, including weak and unsubstantiated claims around their engagements in stewardship, inconsequential efforts, meaningless targets and ad hoc strategies to address water challenges.
Why does it matter? We face increasingly difficult choices as we strive to meet our needs for food, energy and water, while maintaining the other services that freshwater ecosystems deliver. Optimizing water use for one sector can have dire consequences for others – and history tells us that nature usually will draw the short straw. Coordinated collective action is needed if we are to find new, sustainable ways to protect the water cycle in a rapidly changing world.
Business engagement beyond the fence line should not simply be a matter of corporate social responsibility (CSR) or public relations. There is an essential business case for achieving sustainable flows and access to clean water.
Becoming a good water steward necessitates shifting from ad hoc and philanthropic initiatives – even with associated reputational enhancement – to recognizing water as a strategic and core business issue that is material to profits and long-term opportunities for growth.
We designed the following 5 steps to define WWF’s concept of water stewardship.
1. Water awareness
At its most basic, it is awareness of the general water debates (social, environmental, economic), the water management context, the functionality of water institutions and the implications for specific sectors. Awareness also should explore how a company is perceived by others, including basin stakeholders, the press, consumers and NGOs. This will influence the degree of risk that a particular company faces. There is also internal awareness of issues, from the CEO to plant managers and suppliers, which is a key factor in how companies sell the water story within – and get action where it matters. As with each subsequent step, this is an ongoing process and should be revisited periodically.
2. Knowledge of impact
A company requires a wider understanding of where its footprint actually is, where suppliers are located and what dependencies they have on water – both in terms of quantity and quality. This may include some measurement of water footprint, as well as some measurement of the impact a company’s activities have on water, and how this affects people and ecosystems. Companies will begin to understand the wider context of their use, including peer examples and more material risk issues. This understanding should begin to include the context of specific river basins, and the identification of high risk "hot spots" caused by water quantity and/or quality issues relevant to the company.
3. Internal action
This is a logical and easily managed first step of outlining actions, targets, goals, plans and the like, to help tackle the more immediate technical fixes to the problem. It also can be a good time to drive wider awareness through the company. Internal action means engagement with employees, buyers and suppliers to establish the potential opportunities as well as risks for the company. Water efficiency (where appropriate), pollution reduction, measuring and reporting, and internal water governance are all crucial elements of internal action. Companies should begin to engage their suppliers to realize improvements.
Note that the first three steps are materially distinct from the next two. This is where a company shifts from management to stewardship – where the rules, measures, focus, engagement, control and complexity change considerably – and where traditional notions of business sustainability are most challenged by the resource.
4. Collective action
This relates to external engagement and demonstrates that a company now recognizes that working with others and at various scales might be a necessary part of its strategy. Stakeholders can be anyone from other users within a geographical area, such as a specific catchment, to other companies, sector initiatives, public agencies, NGOs, standard setting bodies and so forth.
External engagement can be undertaken without setting targets and strategy. Part of a company’s collective action may be supporting other water stakeholders with more limited resources to respond to water issues.
Partnerships are essential to deliver water stewardship objectives. In order to create sustainable solutions, water stewardship partnerships should encompass the range of stakeholders that have an interest in water management, and engage the expertise, resources and institutional capital of others. It is essential that businesses engaging in water stewardship recognize, understand and respect the efforts that these stakeholders already have made on water management.
Local water issues arise from a complex interaction of environmental factors (climate, geology, hydrology), socioeconomic factors (land use, demographics, water infrastructure), and institutional and political factors (political will, capacity) at a range of scales from very local to national and beyond. For stewardship partnerships to be successful they must address shared risks; that is, activities should tackle problems relevant for all the partners, and not just those specific to the business.
5. Influence governance
Water governance refers to the political, social, economic and administrative systems in place to develop and manage water resources, and the delivery of water services, at different levels of society. Often when we refer to governance, we have in mind the narrow perspective of national government – its policies, laws, regulations and allocation of resources, but advocacy or influence can occur at various scales. Improving governance via stewardship enables non-government actors to play a positive role by fulfilling their responsibilities and supporting other actors and government to do the same.
Engagement in the water public policy arena should be motivated primarily by the mitigation of risk and uncertainty. In some places, companies may choose to use this strategy if risk is high or the need for better management from public authorities is seen to cause future risk.
A lot of engagement will depend on the sector and its ability to influence, whether it is a strategic partner of government (energy, water provision) or a manufacturer of goods. Regardless, success requires the business position to be aligned with the broader public interest. This may take various forms, such as lobbying independently or with other companies, and risk mitigation in specific locations or as part of broad coalitions of businesses and NGOs. All of these efforts should help create greater political support for progressive water legislation and implementation.
This is certainly not the last word on water stewardship. The growing interest from companies and investors in water is a positive trend; if interest turns into principled action, we may be able to reverse troubling trends in freshwater.
This is an excerpt from the World Wildlife Fund's August 2013 report, "Water Stewardship: Perspectives on business risk and responses to water challenges" (PDF).
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