What McDonalds and P&G are doing to keep water risk at bay

A few years after Coca-Cola established a manufacturing plant in southern India, the company got itself into hot water as local wells began drying up. Although no conclusive proof about whether the beverage giant was to blame ever materialized, the event resulted in the plant's closure after just five years of operations and fed into anti-Coke campaigns.

The company learned an important lesson and continues to make progress in reducing its water usage. But Coca-Cola's experience highlights the dangers of ignoring natural resource constraints. Water in particular has become an increasingly strategic risk for corporations, governments and investors. Organizations that don't pay careful attention to the growing impact of this stressed resource can be sent in a tailspin.

That's why the environmental think tank World Resources Institute (WRI) is coming out today with a global water risk map. It allows organizations to better assess the kinds of risks associated with water in almost every part of the world. Big corporations have already begun using the tool, with McDonalds requiring 353 of its suppliers to assess their water risk and Procter & Gamble using it to understand water risk at each of its manufacturing sites.

The free online tool, called Aqueduct, layers a zoomable map with 12 different indicators that could contribute to water risk, including flood occurrence, drought severity, threatened wildlife and media attention.

"All these indicators on the map let us aggregate them together to create an overall picture of water risk around the world," said Robert Kimball, outreach associate for Aqueduct at WRI, in a press call held earlier this week.

The map and indicators are customizable, so a company can choose different indicators as higher priority risks over others. The map will look different for, say, a mining company compared to a semiconductor manufacturer.

The map could be especially useful for companies looking to reduce risk in their supply chains, said Betsy Otto, director of Aqueduct at WRI. If companies are sourcing ingredients nearby in a high water risk area, they could make investments in local farmers in a way that reduces water stress and helps keep their supply chains running smoothly.

Photo of dry faucet provided by Evlakhov Valeriy via Shutterstock.

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