Water Footprinting Makes a Splash

[Editor's Note: This is part of a series of articles excerpted from our annual State of Green Business Report. The report takes a close look at the data behind the green business movement to track whether we're moving the needle on corporate sustainability. Download the free report here.]

Water has been rising as a sustainability issue. In past reports, we've referred to it as "the new carbon" due to its parallels to companies' efforts with their greenhouse gas footprint: understanding and measuring it, reducing it, even offsetting it to the point of being "neutral." Companies in water-intensive industries, such as beverages, semiconductors, electric power, and chemicals, have been increasingly addressing their impacts over the past several years. But now attention has trickled down to a broader array of companies, as the tide of attention reaches a new high-water mark.

State of Green Business

Business headlines about water these days almost always contain the word "risk." "Why Water Is A Risk And Opportunity Your Company Can't Ignore," "Growing Water Scarcity And Its 'Hidden' Risks To Investors," and "The Consequences of Ignoring Water Risks in the U.S." are just three of several such headlines GreenBiz.com ran during 2010. These stories stem from the growing understanding of how global water issues will likely affect company operations in the coming years, as droughts, floods, climate shifts, growing populations, increasing consumption, and other factors cause manufacturing perturbations, disrupt markets, displace customers, lead to energy shortages, and otherwise wreak havoc on productivity and profits. All of which places water security squarely in the boardroom, where it is becoming a strategic issue.

For boards, the first order of business is inevitably getting one's arms around the nature of the risks. That means conducting a water footprint analysis, a means of understanding how much and what kinds of water are used in the making of products and running a business, including the water used by suppliers as well as customers -- upstream and downstream, as it were.

Among other things, such analyses can yield some surprising results about the amount of water embedded in products. For example, a water footprint conducted by one of Coca-Cola's European operations found that it takes 70 liters of water to make one liter of the company's flagship cola, at least when producing it in the Netherlands using Dutch sugar beets. The measurement segregated water types into three types of consumption: "green" (stored rainwater used by farms to produce raw materials), "blue" (water from rivers, lakes, and aquifers used in factories and processors to manufacture products and grow crops), and "grey" (fresh water that absorbs pollutants from agriculture and manufacturing).

If all this sounds complex, it is. Water's comparison to carbon notwithstanding, accounting for the former can be more complicated than it is for the latter. For one thing, the amount of water used to produce something can vary widely, depending on where and how it's produced. A given item can also consume all three types of water. Example: a kilogram of sugar beets sourced in Europe has, on average, a green water footprint of 375 liters, a blue water footprint of 54 liters and a grey water footprint of 128 liters.

Despite the complexity, companies are finding that conducting a water footprint analysis can help them seek opportunities for efficiency and optimization. It can also lead to innovation. Levi Strauss & Co. found a way to reduce the water consumed to make a pair of jeans by up to 96 percent, reducing water use by 16 million liters in a typical season. True, manufacturing accounts for only about 4 percent of the 1,000-gallon footprint of a pair of Levi's jeans -- 94 percent of it comes from growing cotton and consumer laundering of the jean -- but it is that 4 percent that Levis pays for directly.

Water footprinting is an emerging discipline, and companies are often left to create their own rules. Kimberly-Clark, which makes bath tissue, debated whether to include in its water footprint the water used to flush a toilet, which represented 85 percent of the tissue's water footprint. And yet, the company found, the amount of water a toilet uses can affect whether and how its tissue goes down the drain. So the company began giving away free Smart Flush bags, which can save one liter of water per flush -- up to 2,000 gallons a year for a family of four.

All of this represents the next wave of how companies must think about water. Growing pressures to disclose water footprints -- much as companies have done with their carbon footprint -- will lead many companies to dive in. In late 2009, the Carbon Disclosure Project launched CDP Water Disclosure, an initiative seeking to increase reporting on water-related risks and opportunities, especially by companies operating in water-intensive sectors. During 2010, it received its initial responses from companies. Among the findings: There is a drought of metrics used by companies to measure and track their water use.

That's bound to change, and quickly, as water's importance to the bottom line becomes more widely understood -- and experienced -- and as new tools become available from a variety of entities, and as more companies begin to go with the flow.

Photo CC-licensed by polarjez.