Water-related business risks are becoming more and more apparent. According to CDP’s 2016 global water report, 607 companies lost $14 billion last year alone due to water scarcity, drought, flood and other water risks.
Current methods for creating corporate water stewardship targets are inadequate, in part because they often ignore the unique local context of water issues. For companies to succeed as water stewards, they need a new generation of targets. Such targets—based on the local context and guided by the best available science—would help ensure long-term business growth in the face of increased competition and depletion of water.
That’s why CDP, the UN Global Compact CEO Water Mandate, Nature Conservancy, World Resources Institute and WWF are calling for a new approach to setting corporate water targets. Our discussion paper launched today makes the case for setting context-based corporate water targets. Here are four considerations for companies looking to create more impactful water stewardship goals:
1. Local context matters—a lot.
Water is a complex and local issue. Analyzing the locations from which a company withdraws and discharges water is critical to understanding the social, economic and environmental impacts—and associated business risks and dependencies. When watershed issues begin to impact a facility’s operations, the most effective and cost-efficient solution often lies outside the facility’s four walls. As such, water targets at each company facility need not only account for company circumstance, but also for the larger watershed conditions and risks. In short, performance needs to be assessed against the surrounding context.
Aligning company performance with the local river basin context is increasingly considered a requirement for meaningful water targets. Ford reduced the water use per vehicle manufactured in their Cuautitlán, Mexico facility by almost 58 percent between 2000 and 2013, as a direct result of water scarcity in its surrounding area. The Beverage Industry Environmental Roundtable’s approach to performance in watershed context and Teck Resources’ 2030 water goal (which aims to work within ecological limits, regional issues and demands on water resources) are other great examples of a locally based approach.
2. Use science to inform water targets.
A scientific understanding of the watershed conditions must underpin effective water targets, for two reasons. First, it removes subjectivity from the decision-making process. Science, instead of individual interests, informs what needs to change and when. Second, it provides a common language and understanding of sustainable water use and basin limits to facilitate communication between all stakeholders.
This approach is gaining momentum. The Center for Sustainable Organizations developed a context-based metric that relies on a deep understanding of the available renewable water supplies to determine the ecological sustainability of an organization’s water use. Mars Inc. knows that targets should use science for maximum impact. Their Global Sustainability Director, Kevin Rabinovich, notes that “water is a resource that depends upon local context for sustainable management. That means corporate targets for water use must be based on science and understanding at the basin level, and not set arbitrarily.” Mars is usingthe latest science on the global carbon budget, water stress and other ecological limits to set meaningful sustainability targets for greenhouse gas emissions, water and land.
3. Align with public and private sector initiatives.
Governments and local basin initiatives are at the forefront of water management. Existing public water policy goals and other watershed initiatives, will, in theory, align with the identified needs of local communities and ecosystems. Because of this, companies have a lot to gain by aligning their water goals with local, national and global water priorities, such as the Sustainable Development Goals. This helps distribute the cost and responsibility of action across water users in a basin. This type of alignment can also help build trust amongst sectors and stakeholders, drive collaboration and increase investment and collective action.
The benefits of private sector engagement in public water policy are well documented, and are driving increased collaboration between companies and governments to reduce shared water challenges. The California Water Action Collaborative is a unique platform that links companies to state water goals. Through this platform, five companies—including Nestlé Waters North America and Olam—will contribute to and help implement the California Water Action Plan, which provides a roadmap to sustainable water management.
4. Always involve stakeholders.
In 2012, WRI worked with farm stakeholders in Maharashtra, India to produce watershed budgets.
Context-based target setting requires engagement with stakeholders inside and outside the company to identify, understand and reduce shared water challenges. Without the perspective of local actors—such as civil society groups, farmers, local governments and other companies—corporate water targets are likely to miss some of the many perspectives and needs present in the local watershed context.
General Mills, for example, has identified multi-stakeholder collaboration as a foundation of success in implementing their water strategy, which aims to protect the human right to water and sanitation in the communities in which they operate. Their water stewardship plans stem from consultation with local stakeholders from relevant sectors (industry, agriculture, government, NGO and communities) in the higher-risk river basins in which they operate.
By incorporating these considerations, companies are more likely to reduce water-related business risks, sustainably grow in the future and accelerate positive impacts from collective action. Moving forward, CDP, the UN Global Compact CEO Water Mandate, Nature Conservancy, World Resources Institute and WWF are working to establish a roadmap to help corporations develop context-based water targets.