As a trio of water experts recently observed in the Harvard Business Review, water is often a hidden climate risk for companies. While operations in water-stressed areas may face increased regulation and limited access as the climate warms, other areas will likely see greater flooding. More companies — from Google to PepsiCo — are beginning to understand that their impact goes well beyond their operations and are setting goals to reflect that. The challenge then is what it will take for companies to meet those targets, to mitigate water related risks, and plan sustainably for a water-constrained future.
Water is the linchpin for many of the environmental, social and governance (ESG) issues a company faces, and it flows through virtually every global challenge — from climate change to energy use, biodiversity loss to food insecurity. In addition to water impacts on corporate operations and production, the decisions companies make about their water usage affects situations well beyond their fence lines.
Climate change is making water more of a concern for communities as already water-stressed regions are seeing greater swings in the boom-and-bust cycle of droughts and floods. Also, crumbling water infrastructure means more water is often lost before it reaches its intended consumer, and lower supplies lead to greater competition.
Several drought-stricken states in the western U.S., for example, rely on the same sources of water for agriculture, municipal drinking water, manufacturing and energy supply. Those sources are at historic and critically-low levels. Similarly, three states in the eastern U.S. have been embroiled in a decades-long conflict over water allocation. And worldwide, as water scarcity becomes increasingly common, conflicts over water access are rising. Further, companies are more often at the center of the problem when they should be at the center of the solution.
Moving beyond water compliance
Measuring and managing water consumption is a critical first step in protecting the communities where a firm operates, but it is certainly not the final step anymore. Organizations must move towards water stewardship and think beyond water consumption to water impact. How is water being used in both direct and indirect operations? How can organizations use water in a way that is both environmentally sustainable and economically beneficial? How does a company’s water consumption and use impact the watershed? And how does the watershed impact a company’s operations?
“Companies who are good water stewards go beyond compliance and seek to fully understand the total impact of their water usage across their operations, the watershed, as well as risks with water governance, water balance, water quality, and more, ” said Andy Bastien, senior product manager for water at FigBytes, an ESG and sustainability management platform provider, told TriplePundit.
“Companies are part of the community,” he said, “and they may not see themselves as that yet.” Understanding their role in the community can help companies to see their true water impact — and that understanding comes from engaging directly with multiple stakeholders. “You don’t want to damage your neighbor’s house,” Bastien told us, “and it’s the same with water. It’s about more than just your bottom line. It’s about engagement with government and targeted communities [like Indigenous or vulnerable communities] to identify and achieve common goals for sustainable water management as well as shared water security.”
That means companies today are more than water consumers — they must become water stewards.
Data: An essential building block of water stewardship
Becoming a steward requires the same first step as being an informed consumer: data. Tracking consumption and reducing water is critical, but only through engagement with the larger water basin community can a company understand its greater impact.
“Better data will show you the hotspots you may have in your operations that you may not be aware of,” Bastien explained. “It’s one thing to look at the bill coming in every month, but beyond just a reduction on your bill, what’s the impact of the water you’re using? Data from multiple internal and external sources will provide a more comprehensive picture of what’s happening. So operational data on water consumption, water return data, geographic-based datasets, combined with recognized water frameworks will help companies better understand water impacts and move closer to water stewardship.”
Sustainability software like FigBytes’ Water Stewardship Solution can help companies take data-driven steps to address their wider water impacts. “We look at water from a climate standpoint,” Bastien said. The platform enables companies to do a full consumption assessment against the local community and water basins and look at both the inputs and outputs of that water.
The methodology allows companies to calculate their blue (freshwater), green (water from vegetation and evaporation), and grey (wastewater) footprints. Through that data, the ultimate goal is to link the environmental with the social and governance priorities by looking at the impacts on ecosystems, the climate and people. From there, companies can manage their strategies and pinpoint how to adjust their goals.
With more comprehensive data, companies can better understand how climate change presents new risks to their business, but many need help to understand their full impact and create a strategy to use that information to minimize impact on water basins and ensure sustainability — both environmentally and operationally — in the long term. This can include, for example, mapping out investor and regulatory demands for an electric utility or detailing current and potential water consumption risks for a food manufacturing company.
Why it matters
“When we think about climate change, we primarily think about temperatures and melting glaciers — that’s water,” Bastien said. “If water is one of the main impacts of climate change, then how you use water — your own impacts — become more significant. Water impact is beyond consumption; it’s the relationship between climate and consumption. And that matters for the long term.”
Much like other climate actions, the key is implementation. Impacts may be more localized when it comes to water, but they also have long-lasting effects and dire consequences if ignored. By arming themselves with data, companies can make strategic decisions that benefit their operations and the people who live and work nearby. Becoming good water stewards is not only critical for healthy communities, it’s also good business.
This article series is sponsored by FigBytes and produced by the TriplePundit editorial team.
Image credit: Elijah Hiett/Unsplash