Posts tagged ‘water scarcity’

Six steps to a successful water strategy

Nick Martin

The good news for companies in the early process of embracing a corporate water strategy is that heightened awareness of the issue has resulted in greater availability of data, tools, and best practices.

Although much of the most innovative work continues to be guarded due to competitive advantage, there are many leading companies and/or sector examples to learn from. From my experience, I would point to the beverage industry and most notably the Beverage Industry Environmental Roundtable as a prime example.

Having accepted water as a core business issue, how do companies develop a corporate water strategy given the fact that comprehensive, standardized methodologies may be years away?  Successful companies have followed a common process:

Step 1: Know your water sources, use, consumption and discharge for all operations. Benchmark operations, set targets and drive efficiency. “Walking-the-walk” is a prerequisite for a successful corporate water strategy.

Step 2: Establish a cross-functional water team to define a viable three-to-five-year water stewardship vision that is measurable and aligned with overall business goals.

Step 3: Complete a baseline water risk assessment to understand and compare local watershed conditions beyond the four walls of each facility.  Examine risks and opportunities including physical, regulatory and reputational.

Step 4: Develop, implement and maintain local water management plans (e.g., location or site specific) based upon Step 3 results. Incorporate performance monitoring systems and issue escalation processes.

Step 5: Engage with supply chain partners to understand your company’s broader water footprint, impact and opportunities.

Step 6: Strategically engage with external stakeholders through partnerships, reporting and other related efforts.

A word of caution:  Water issues are highly localized and dynamic.  Successful companies have addressed the following types of questions to apply their resources to greatest advantage:

  • Are your facilities among the largest water users in a given community? How does your efficiency compare to peers and other local industries?
  • Can water issues limit growth aspirations?
  • Could individual sites face water restrictions in the next 5, 10, or 15 years?  If so, are there viable back-up supply and/or treatment options?
  • Can you meet current and future regulatory limits?  What level of investment may be required and when?
  • How intense is media or political attention to water in communities where you operate?
  • Can you justify water-related business expenditures and strategically allocate resources?

Water risks are a reality for every business. What are some of the questions you think companies should ask in developing their water management strategy?

 

Nick Martin is an Associate with Antea Group. He will discuss ideas for developing a water strategy during NAEM’s webinar on “Water Risk Management” on June 21.

June 15, 2011 at 9:00 am Leave a comment

Water stewardship: Paralyzing complexity or competitive advantage?

Nick Martin

The message from stakeholders and investors is clear: Companies are expected to govern and begin disclosing water-related business risks.  Historically, most companies have been able to simply acknowledge water as one of many important business issues. Much has changed in the past few years, with water positioned as a competitive issue and expectations trending towards quantification of water-related financial liability.

However, growing disclosure pressure isn’t the same as providing pragmatic “how to” for characterizing and quantifying water-related business risks.  Moreover, characterizing the risk is only the beginning. The real challenge for companies is how to strategically prioritize risks and opportunities, build necessary competencies, and drive local water management plans. Why is water such a challenging, and potentially paralyzing, business issue you ask?  Consider these factors:

  • Nearly every activity, product, or business transaction uses water in some form – yet, there is no substitute;
  • Water is both a local and temporal issue with potentially widely varying conditions (e.g., floods and droughts can occur in nearly the same location);
  • Water, in general, is difficult to bound, measure, transport, and define access rights;
  • It’s challenging to justify water-related strategic or capital investments based upon traditional ROI calculations;
  • Cross-functional participation and solutions are required, including engagement up/down a company’s supply (value) chain; and,
  • It is widely considered a human right, placing it in the sweet spot for media, political, and stakeholder attention.

What does this mean for companies that have yet to fully embrace water as a core business issue?  There are two basic options:

  1. Start or accelerate a water strategy soon and possibly stay “ahead of the curve” thus determining your own pace of implementation; or
  2. Do the Basics – hedge your bets that water will not directly impact your company and expectations will stagnate. Given that water appears to be a resilient issue, companies that hedge could face monumental leaps to catch up to peers and meet stakeholder expectations in the near future, especially given the complexity and location-specific aspects. The cost of inaction could be significantly higher than self-paced implementation.

So, the first question many companies ask is how fast do they need to move?  Well, the direct impact of water issues on any given company depends upon a range of variables including sector, size, brand recognition, and public image.  First, let’s look at what we are seeing:

  • Publications – recently published materials appear to be trending towards standardized buckets of water risk: Physical; Regulatory; Reputation; Investment.  This has translated the business risks into simplified, real world concepts for a wide-range of stakeholders and investors to more easily comprehend and formulate inquires.
  • Surveys – increasing number of non-governmental and supply chain surveys, including the second annual CDP Water Disclosure Project questionnaire, have significantly increased transparency of existing corporate strategies and knowledge gaps.
  • Corporate Reporting – more companies are reporting water metrics, as well as water footprints, product life cycle assessments, and intensity indicators.
  • Initiatives – water-focused NGOs and collective action partnerships have increased exponentially in recent years ranging from advocacy to standard development.

Collectively, these actions have provided investors and stakeholders with confirmation that 1) water is in fact a real business and investment risk; 2) a majority of companies are not proactively addressing the issue; and 3) water can be effectively managed, quantified, and reported on as demonstrated by the small number of corporate leaders in this space.

Nick Martin is an Associate with Antea Group. He will present ideas for developing a water strategy during NAEM’s webinar on “Water Risk Management” on June 21.

June 6, 2011 at 12:19 pm Leave a comment


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