There’s little question water is an important piece of the Environmental, Social and Governance equation. Clear, plentiful freshwater is simply as essential to enterprise — and life — as clear air. But many corporations endure from carbon “tunnel imaginative and prescient,” with many of the motion thus far on the “E” a part of ESG centered on carbon discount. This isn’t notably shocking, as water dangers are extra difficult and tougher to outline and measure than carbon emissions.
However corporations ignore water at their peril. Issues with water amount and high quality disrupt operations and provide chains, cripple revenue margins and damage model worth. CDP stories the price of enterprise inaction within the face of water threat is 5 occasions larger than the price of appearing to handle these dangers. Firms that hesitate to take their first steps in water stewardship miss alternatives to handle shared challenges and improve model worth. Don’t look ahead to the following water disaster to begin addressing water-related dangers, challenges and alternatives in your small business operations or as an investor in water-intensive companies.
Regardless of their shared significance, water can’t be addressed in the identical method as carbon. A ton of carbon mitigated in Miami has the identical profit long run as a ton of carbon mitigated in Mumbai. That’s not the case with water; a gallon of water saved in water-abundant Milwaukee doesn’t assist water-scarce Phoenix. But Milwaukee faces its personal water high quality and stormwater administration issues. In reality, each watershed comes with its personal distinctive brew of water high quality and amount points. For corporations with a number of services unfold throughout areas or international locations, the native but numerous nature of water points complicates nascent forays into water stewardship.
That’s why it’s essential to demystify ideas equivalent to “contextual targets” and speed up honest company efforts at addressing water-related dangers. Whereas water administration and conservation are the inspiration for constructing a extra subtle water technique, corporations want to maneuver past easy water administration and arbitrary effectivity metrics to true water stewardship that acknowledges the various and native nature of water points.
But many corporations endure from carbon ‘tunnel imaginative and prescient,’ with many of the motion thus far on the ‘E’ a part of ESG centered on carbon discount.
Water stewardship begins with understanding how water is utilized in operations and the situations of the watersheds the place corporations function and/or supply. Meals and beverage corporations equivalent to Common Mills pioneered this method years in the past as they moved away from across-the-board effectivity targets to a extra strategic and nuanced method. Common Mills’ pragmatic but contextual method began with 4 primary steps, in line with its printed water coverage:
- World evaluation of water stress to determine precedence watersheds.
- Deep-dive evaluation of precedence watersheds to grasp challenges and alternatives, together with optimistic and destructive impression of Common Mills operations.
- Institution of a multi-stakeholder science-based water stewardship motion plan, together with session with native stakeholders from related sectors (business, agriculture, authorities, NGO and communities).
- Implementation of water stewardship plan and monitoring for outcomes.
As companies be taught extra in regards to the watersheds wherein they function and supply, they will improve model worth by seizing the chance to collaborate with neighboring companies and different native water customers to handle shared challenges, serving to enhance long-term water safety for all. Partaking stakeholders on shared water-related points is central to good water stewardship efficiency, whereas speaking with key stakeholders equivalent to ESG traders and clients is essential to boosting model worth.
For corporations equivalent to Nutrien, the world’s largest supplier of crop inputs, providers and options, the idea of partaking key stakeholders throughout a big, numerous worth chain could possibly be intimidating sufficient to halt water stewardship efforts earlier than they even begin. However via its work with The Water Council, a nonprofit devoted to freshwater innovation and stewardship, Nutrien is main a brand new wave of corporations serving to to outline good company water stewardship.
Water is essential to producing Nutrien’s merchandise of potash, nitrogen and phosphate. The corporate works intently with farmers, who want entry to ample clear water to sustainably develop crops. Thus, water is a cloth ESG subject for Nutrien. The corporate already was actively managing water for effectivity and allow compliance, however it wasn’t holistically evaluating water dangers and alternatives and didn’t have a cohesive company water stewardship technique.
A watershed threat evaluation helped Nutrien take into consideration water another way.
“We began trying on the watersheds that we function in, not simply our websites and the water that they want,” stated Mike Nemeth, senior advisor for agricultural and environmental sustainability.
Firm leaders discovered that water should be addressed domestically as all watersheds face totally different challenges.
Enterprise that proactively make sure the sustainability of native water assets construct stability in their very own enterprise operations and model. Now greater than ever, customers need to purchase services from corporations that do good, and nothing is extra private and emotional to customers than water. Traders are additionally more and more noting the significance of water stewardship.
To cite an previous music, “You don’t miss your water ‘til your nicely runs dry.” Business has an essential position to play in defending water assets for its personal profit and the good thing about the neighborhood. With the identical power devoted to decreasing carbon, companies should urgently steward water assets by widening their “tunnel imaginative and prescient” of sustainability points.
Stacy Vogel Davis contributed to this report.
