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Water as an opportunity for brands to drive strategic value

By embedding water strategy into business strategy, companies can create an advantage not only operationally and across the supply chain, but also with employees and customers.

Watershed in Utah

A sign in Lambs Canyon near Salt Lake City, Utah. Image via Shutterstock/M. Outdoors

Discussions of how the corporate sector can address the impacts of water scarcity, poor quality and lack of access to safe drinking water, sanitation and hygiene (WASH) have been ongoing for some time. It is now recognized that water challenges impact business growth, economic development, social well-being and ecosystem health. It's also recognized the private sector has a unique role — and opportunity — in addressing these challenges.

At the 2021 Stockholm World Water Week, hosted this summer by the Stockholm International Water Institute (SIWI), I had the pleasure of convening a panel about how water should not only be seen as a risk to businesses, but more importantly, how it can be viewed as an opportunity to drive strategic value. This article shares highlights from the conversation, which included diverse corporate water experts across industries: AB InBev, Gap Inc., World Wildlife Fund (WWF) and Alliance for Global Water Adaptation (AGWA). The panelists explored how water constraints can be seen as a catalyst for creativity and innovation.

By embedding water strategy into business strategy, companies can create water impact not only operationally and across the supply chain, but also through employees and customers who want to work for, and shop with, brands that align with their values.

As the world continues to grapple with water insecurity, and climate change only exacerbates the issue, the challenge across stakeholder groups — from the private and public sector to NGOs, entrepreneurs, investors and beyond — is to think about how we live and operate in today’s climate, while preparing for future scenarios. Companies have an opportunity to contribute to creating sustainable and resilient communities and businesses for people and the planet. 

Watershed

Image via Shutterstock/Paokatos

Shifting the focus from risk to opportunity

The experts on the World Water Week panel talked about the need to shift the perception of water as a social and sustainability issue to water as a business issue.

The value water can derive is easiest to illustrate when it can be linked back to delivering long-term value to shareholders. This can be done by:

  1. Developing a strategy to integrate water stewardship into brands to increase engagement with customers and consumers;
  2. Proactively communicating water stewardship commitments and performance to the company workforce to improve engagement, recruiting and retention; and
  3. Aligning a water stewardship strategy with business growth and objectives.

The importance of having a corporate water strategy that can illustrate the bottom-line impact it derives will only increase, as businesses across a range of sectors find themselves deeply affected by the multiple water crises at play today. Companies must acknowledge that they can only thrive when the communities along their value chains thrive — and no community in the world can thrive without water. This was a central theme of the panel.

Strategy and stewardship should go hand-in-hand

Another important topic during the panel was the fact that, when we talk about water strategy and stewardship, strategy shouldn’t replace stewardship; it’s an added dimension.

Alexis Morgan, global water stewardship lead at WWF, discussed how for companies, risk drives engagement, while value drives investment. It's often the case that a corporation's water journey begins as a compliance issue. It then evolves to stewardship because there's a recognition that there are many products you can’t make without water; thus, engaging local stakeholders and addressing basin-specific water needs helps mitigate water risk and build resilience. From there, a company can evolve to the strategy phase when it is proactively investing in innovation. Think new strategies, new business models, new products. By integrating water strategy into other parts of the business, companies can drive value creation.

A healthy ecosystem — driven by healthy people and thriving businesses — contributes to a positive overall impact.

Morgan shared how, through WWF’s work with corporations on their water strategies, he was often struck by how much of the dialogue was risk-oriented instead of opportunity-driven and noted it often felt as if he were pushing a big rock uphill. The risk dialogue sequesters a company into a certain part of business, when you really need to be talking to sales, marketing, finance, the C-suite. After all, water is valued differently by different entities, so it's critical to illustrate how water appeals to all of them, and that must be done by linking water strategies fundamentally to business strategies.

The earlier that connection is made, the easier it'll be to move the needle on an effective, and holistic, corporate water strategy. Start with strategy and opportunity, not risk, and you'll experience less of an uphill battle from there.

This view of water also being an opportunity for businesses was shared by Samantha Fahrbach, global director of water and sustainability operations at ABInBev, and Paul Fleming, an expert on corporate water strategy.

Fahrbach highlighted the positive impact of ABInBev on the communities in which it operates, stating, "Even beyond our product, and perhaps even more fundamentally, as a company, we believe that our business only thrives when our communities thrive — and no community in the world can thrive without water.” This goes beyond just framing water as an operational business risk and instead as a positive impact for the communities.

Fleming, formerly with Microsoft, believes that a corporate water stewardship strategy can create a win for companies and communities. For example, through Microsoft rolling out its water-positive commitment, the company looked at how its products, services, customers and employees could be part of its water strategy and commitment. Also, its Climate Innovation Fund and a $10 million investment in a venture fund is expected to have a positive impact on addressing water and climate challenges, creating new opportunities for businesses and the communities Microsoft is part of.

Building climate-resilient companies and communities

Lisa Hook, senior manager for water stewardship at Gap, talked about how water is strategic to her company. She outlined three main reasons:

  1. It's aligned to Gap's business values. Gap is a purpose-driven company that's inclusive by design. Most important, fundamentally, Gap believes water is a human right. It's important for the company to take action to have a positive impact for the communities touched by its business.
  2. It's critical to Gap's business. The apparel industry relies on water — and has impacts to both water quantity and quality. Growing cotton requires a significant amount of water, and cotton is often grown in water-stressed regions. Meanwhile, pesticides used to grow cotton and dyes used in manufacturing can affect the water quality. 
  3. Strong business relies on strong, resilient communities. The communities in which Gap operates rely on the same water systems for their needs as the company does for its business. By collaborating with communities and local stakeholders to solve water challenges, Gap believes it can turn those issues into shared value once resolved. That equates to a more resilient future for the community and its people, for business, and for the ecosystems and the economies of those places.

According to Hook, those three factors combined make it easy for Gap to see there's strategic value in water and there's a business case for why the organization should not just care about it but treat it as the precious resource it is.

There is much other companies can gain from taking a similar approach. We must all understand that water impacts are shared by businesses and industries that operate within the same watersheds. A healthy ecosystem — driven by healthy people and thriving businesses — contributes to a positive overall impact.

Water is where people, planet and business come together.

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