Why corporate water tools' importance is on the rise

Why corporate water tools' importance is on the rise

As access to water becomes a critical barrier to doing business, new corporate water tools are popping up to help companies monitor and manage water usage and risk.

Some recently introduced tools include a local water impact assessment from Global Environmental Management Initiative (GEMI) and a questionnaire that helps identify water risks in supply chains and investment portfolios from the World wildlife Fund (WWF) and German development finance institution DEG.

Water tools have also been put out by the World Business Council for Sustainable Development and Water Resources Research. While the tools vary a little, they all uniformly assess water usage and place it in a geographic context.

The tools are easy to use; some are free, some come with interactive maps and go beyond assessing risk to providing a mitigation toolbox for corporate users.

A combination of drivers that have led to water scarcity have made these water tools essential for companies that have yet to assess and address water risk.

"We talk about water scarcity, but what we are talking about really is competition for water supply, with a finite amount of water and increasing urbanization, population growth and global growth," said Will Sarni, practice leader for enterprise water strategy with Deloitte Consulting.

These factors have pointed the spotlight on how companies manager water risks.

The carbon disclosure project water report that came out two years ago has also driven how companies assess water risk, since it sends out a questionnaire about how they use water and dispose of it, similar to carbon risks. Last year the project received a 60 percent response rate from companies surveyed.

Sarni characterized water risk for companies into three categories:

  • Physical water risk, which deals with do you have enough and good quality water;
  • Regulations, which are becoming stringent over time and increasing, tiered rates; and
  • Reputation issues - stakeholders pay a lot of attention to how companies use water.

"If companies are not doing it, they should, because people will start to pay attention to how they manage water," Sarni said.

With his clients, Sarni is beginning to see a better understanding of how water is used across the value chain. "They're looking at where they get water data from, that it has a value beyond pricing," he explained.

Corporations have begun to use one or more of the published tools to monitor where the source is located, how much water is available within a watershed, who is using it and how much and what are projections over time.

The next step is for companies to start thinking about how to use less water and how to make better use of their supply. Then they work with non-governmental organizations or NGOs in the water space and decide on how to address water stewardship.

In the regulatory framework, some sectors get priority over others. For instance, in South Africa, agriculture gets priority over industry. The U.S. has regulations built around usage, discharge and allocation.

Sarni thinks the way we use water will have to change eventually.

"Now we use it once and throw it away. There's going to be a shift, with companies focusing on how to reuse and recycle water and maximize it before it's discharged."

Another trend in the future will be an awareness about how energy and water connect. While there's a lot of talk, it's a complex nexus between energy, water and food.

"If you draw and transport water, you use energy. In California, 19 percent of the state's total energy usage is from transporting water."

On the flip side of that coin, generating energy also requires water, be it nuclear plants, power plants or oil companies that use it for fracking.

Water security is therefore connected to energy security and the economy, which also presents business opportunities for new products that address water reuse and recycling.

Sarni said he's helping clients go beyond risk mapping to understanding the risk so they can mitigate it. "We're helping them think of how to engage others in a watershed."

He expects there will be more water tools coming out in the future, as demand increases, but assessment tools are only the beginning of the journey.

"One of the most critical pieces in water risk is stakeholder communication, so understanding who the stakeholders are and how to work with them collaboratively in tapping a finite source is an exciting area."

Water pump photo via Shutterstock.