5 Ways Leading Companies Dive into Water Management
Water, water everywhere … except it's not everywhere any more. And execs are starting to take notice of how water scarcity is affecting their business, what with pressures from agriculture, industrial processes, the impacts of climate change and growing world population all taking their toll on water supplies.
So where does water stand on corporate agendas?
Coca-Cola, Diageo and SABMiller are just a few big names in business that have made waves with the publication of ambitious agendas on water sustainability over the past two years. But global water strategies that integrate water into a broader corporate sustainability agenda are few and far between.
At Verdantix, we wanted to find out more about what both water-intensive, and non water-intensive industries are doing to tackle sustainable water management issues.
Speaking to 100 senior executives in $1bn-plus firms from different sectors in 10 countries, our research shows that water strategies are more about risk than opportunity, with the majority of businesses focusing on compliance, rather than integrating water into broader corporate sustainability strategies.
Yet firms will keep on spending on water issues to manage the risks: Our calculations show that in 2012, firms with U.S. revenues of over $1bn will spend $980m on water sustainability, a figure that we forecast will climb to $1.5bn by 2014.
Our report, The State Of Global Corporate Water Strategies, shows that to date, businesses' water initiatives tend to share five characteristics:
1) Formal water strategies are the norm. Nearly a quarter of firms in water-intensive industries have had a documented water strategy in place for over a decade; 90 percent of them have one in place today. As for the non water-intensive side of our investigation, 64 percent already have documented strategies. Consultants should take note: We forecast that U.S. firms will spend $49m on services in 2012 as they seek advice on creating their own water strategies.
2) Reporting is standard practice. A lack of universal standards as to how firms should measure their water performance hasn't put businesses off: 93 percent of water-intensive firms and 77 percent of non-water intensive firms report their water data. The latter's achievement is more worthy of merit, as many water-intensive firms are already obliged report on water quality to maintain their licence to operate.
3) Board-level involvement is minimal. It is managers, rather than execs, who take charge of corporate water strategies. Our research finds that in 43 percent of firms surveyed, managers handle water issues; 32 percent of firms rely on directors or heads of departments to take charge; while only 20 percent of firms keep an eye on water strategies from the top.
4) A lack of targets. Targets are not a standard feature in corporate water strategies: 41 percent of water-intensive firms had specific water performance targets, while only 21 percent of those in non water-intensive industries had set targets. With Verdantix forecasting that firms will spend $98m on services and equipment to maintain, repair and keep operational existing water strategies in 2012, engineering and environmental consulting firms such as AECOM, CH2M HILL, ERM and WSP Environment & Energy can find opportunities here.
5) Meters support water strategies. Water meters are the most popular tool used for supporting water strategies; 70 percent of firms in water-intensive sectors and 59 percent of non water-intensive sectors use them to collect data. Nearly a quarter of firms also turn to water accounting, foot-printing tools and product LCA software to gain insights into water use. Looking forward, over the next two years our research shows that executives have few changes planned for their water sustainability strategies, focusing on mature initiatives that will deliver cost reductions and water efficiencies.
There are some firms that are an exception to this rule -- H&M, Levi's, PepsiCo and Unilever are already endorsing water stewardship, implementing initiatives that extend up and down the supply chain such as ecosystem protection and water-efficient product development -- but they continue to be a minority. Compliance with regulation, data collection and reporting take precedence for most firms.
But as standards for the measurement of water performance and pricing of water continue to evolve nationally, regionally and eventually globally, more execs will start to integrate water into corporate sustainability strategies.
Photo illustration of water in a pipe via Shutterstock.com