GE, Coke Among Industry Leaders Launching Water Risk Mapping Project
<p>Also taking part in the World Resources Institute's Aqueduct Alliance are Bloomberg, Dow, Goldman Sachs, Talisman Energy, and United Technologies -- all working to develop a new water risk database and mapping tool.</p>
For a company like Goldman Sachs, water represents a potential risk lurking in its investment portfolio. For GE, it may also offer a potential business opportunity to help its clients overcome their challenges.
Both companies joined the World Resources Institute to launch the Aqueduct Alliance. They've just added Bloomberg, The Dow Chemical Company, Talisman Energy and United Technologies in a bid to develop a new database and mapping tool that will help companies and governments make more informed water-related decisions.
Interviews with sustainability leaders at WRI and its partner companies spelled out just how complex water issues are for industry.
"There's more to water risk than just supply," said Robert Kimball, the Aqueduct Project's communications and outreach coordinator.
Kimball pointed to the reputational risks that may arise from the perception that a company is a poor environmental steward, in addition to the potential risks from litigation or costs associated with regulatory changes.
"A lot of those risks aren't being properly captured, measured or managed," Kimball said.
Every sector is water dependent in some way, although some more so than others. Water-intensive industries include oil & gas, food & beverage, agribusiness, power generation and semiconductor manufacturing, to name a few.
The tool wouldn't be the first in the marketplace -- the World Business Council for Sustainable Development unveiled its own Global Water Tool in 2007 to help organizations assess water use and availability. The Aqueduct Alliance tool will also layer social and governance information over the hydrological data, such as the amount of infrastructure investment taking place in a given region.
So far the project has developed a prototype of the tool that covers the Yellow River Basin in Northern China. By the end of the year, the Aqueduct Alliance will release four additional maps on river basins of high priority, including the Colorado River in the U.S., the Murray Darling River in Australia, the Orange-Senqu River in Africa and the Yangtze River in China.
The Aqueduct Alliance will also introduce water data that is being donated by the Coca-Cola Company. The beverage giant has amassed a wealth of water risk data and models that can be used to analyze water stress, quality, socioeconomic factors and potential impacts from economic development, climate and population changes.
"For Coca-Cola, water is the lifeblood of our business," said Joe Rozza, Coca-Cola's global water resource sustainability manager. "We really want to be doing everything we can to support more strategic decision-making around global water supplies."
A company may use the tool when deciding where to build a facility, Kimball said. A beverage company looking to build a new bottling plant in China, for example, may generate a map that highlights where certain water risks, such as quality and supply consistency, are the highest and lowest.
Or a company may plot its facilities on a map that identifies high and low risk levels for each site, laying the groundwork for a range of mitigation strategies, such as where they may need to target investment to head off potential water quality issues.
GE can envision using the tool to generate business opportunities through assessing water risks for its clients, which may include power plants, steel mills or petrochemical companies.
"Our work with customers is to help them look around the corner," Jeff Fulgham, chief sustainability officer at GE Power and Water, explained in an interview. "What does 2015 look like?"
In addition to funding for the project, GE, with its 8,000 employees in the water business, also brings great expertise to the table, Fulgham said. Goldman Sachs, meanwhile, sees its role as offering a financial perspective to develop a functioning tool.
"Goldman Sachs was a founding member because water risk is an increasingly important issue that is not fully considered in relevant business and investment decisions," Kyung-Ah Park, managing director of the firm's Environmental Markets Group, said in an email. "We want to play a key role in developing a tool that can facilitate better management of water risk and help identify opportunities."
Companies can participate by offering funding or assuming an advisory role, Kimball said.
"You don't have to be a funder to have an advisory role," he said, adding that companies can also join the Aqueduct Alliance's working groups. "We want to have as many different voices as possible around the table."