The water dilemma
Companies need to have a water strategy as demand continues to rise but supply does not grow
Water, water, everywhere but not a drop to drink. Even in this winter’s floods, this misquote of Coleridge remains an English weather joke. Such is the fickleness of Britain’s weather, jest cynics, that there will probably be hosepipe bans in the nation by July.
It makes it a tricky time for sustainability consultants to convince companies that they should have a strategy for water that’s comparable to the one most businesses now have for carbon management. However that, say some, is at the heart of the issue.
‘People say Britain is a wet country. Why do we need a water strategy?’ regales Ed Gillespie, co-founder of sustainability communications consultancy Futerra. ‘But it’s a question of the distribution of water and of Britain’s population.
‘Most of the UK’s rain falls in South-West England, Wales and Scotland, while 25 per cent of the population lives in the South-East. In terms of rainfall per capita, London has less than Somalia and the Sudan. Even when we feel like we’re getting a lot of rain, we live in a cloudy desert. People perceive it one way but the reality is very different. The water tables are not getting regenerated in some of our biggest cities.’
In terms of rainfall per capita, London has less than Somalia and the Sudan
The South-East’s problem is being exacerbated by the trend for house owners to tarmac over their front gardens, reducing the amounts of water that permeates through the soil. London’s leaky Victorian pipes do not help either and the heavy publicity given to UK weather events like the floods makes communicating the need for companies to adopt formal water strategies a major challenge. To many people, water supply in Britain also feels like a subject that pales in comparison to its importance as a life and death issue in other parts of the world.
This year, water crises ranked third behind fiscal crises in key economies and unemployment in the World Economic Forum’s survey of global risks, published ahead of its annual meeting of chief executives and world leaders in Davos, Switzerland. According to the survey, the reckless use and abuse of water could seriously threaten social stability, disrupt business supply chains and endanger the production of food and energy. Another three of the WEF’s top ten risks – climate change (ranked fifth), floods and droughts (sixth) and food crises (eighth) also involve water.
Water as a global issue now has celebrity champions such as Oscar-winning actor Matt Damon, who has co-founded Water.org, a not-for-profit organisation with a micro-finance programme that has helped 250,000 people in emerging markets to pay for water wells and pipes that it helps source and install.
Almost one billion people are believed to lack safe and consistent access to water, while 2.5 billion – one-third of the globe’s population – do not have regular access to sanitation.
The message from Water.org is that more people have a mobile phone than a toilet, while every 20 seconds a child dies because of the lack of availability of clean water and sanitation facilities.
‘Everybody’s got a different reason to be interested in water in terms of security and scarcity,’ said Damon at Davos. ‘Our interest is in access to it. The fact that two million children are dying every year…it’s almost something that doesn’t make sense to us intellectually because they are dying of completely preventable diseases. [Clean water] is something we solved in the West a hundred years ago.’
While such suffering touches all but the most hardened of hearts, the need for British companies to adopt formal water strategies remains a hard sell.
Will Sarni, director of enterprise water strategy at business advisers Deloitte, who has written two books on water strategy, says the issue is being driven by a worsening global water supply and the globalisation of supply chains. Both, he says, have led to British firms no longer being able bask in the belief that being on an island surrounded with water means that this is one global problem that is not on their patch.
Over the past five to ten years, says Sarni, increased competition for water has been driven by rising populations in water-constrained areas, growing middle classes (who tend to consume more water as they buy labour saving devices), greater energy use and the effects of climate change.
‘There’s a finite amount of water on the planet but there’s increasing demand for it, particularly from certain sectors,’ he says. ‘Food and beverage companies have been focusing on water strategy for the last eight to ten years. Over the last three years or so, other sectors have started to see their water security as a business risk, while some also see it as an opportunity for water recycling or other clean water initiatives.
‘The energy sector needs water for power generation. The oil and gas industry needs it. You can’t frack without it. All sorts of businesses need it.’
The result, says Sarni, is that all businesses, not just those with emerging market exposure, need to figure out how they are going to steward what is an increasingly constrained resource. This may encompass clean water technology, water and sewage treatment, water recycling and measures to combat river pollution. The fact that Deloitte’s water strategy group is based in Denver, Colorado and that it has no such unit in the UK might speak to the difficulty of convincing sceptical Brits that water is an issue.
However, Robert Nuttall, partner at sustainability and reputation management consultancy Fortitude Partners, who has advised companies ranging from Whitbread to BMW, Rio Tinto and BT and was on the core team that devised Marks & Spencer’s Plan A sustainability programme, says water strategy is rising up UK corporate agendas.
‘With a lot of the organisations that we work with, water management is one of the key factors,’ he says. ‘It’s an issue that’s increasing in importance. You only have to look at the Davos report. Water is now one of the top issues in the world. It’s gone right up the agenda.’
Companies with operations in developing markets have naturally been the first to respond. ‘If you’re a company selling products in emerging and developing markets, you have to be on top of this issue,’ says Gillespie. ‘You simply cannot sell some products in these countries because they don’t have enough water.’
He says most fast moving consumer goods groups, including Futerra clients Unilever and Reckitt Benckiser, are prioritising the topic, with some adapting their product ranges accordingly. Unilever, for example, has developed low-rinse washing powder for use in water-constrained parts of India and linked up with competitors including Tata Global Beverages, whose Tetley Tea rivals its own Lipton, Brook Bond and PG Tips tea brands, to form the Tea 2030 initiative. The campaign is aimed at managing global threats, including water shortages in Assam, the main tea-growing region of India, where rainfall has fallen significantly over the past 60 years.
Other drinks groups, including brewer SAB Miller and Coca-Cola, are also investing in water stewardship initiatives, while Starbucks has a goal of reducing water consumption in its company-controlled stores by 25 per cent by 2015, from a 2008 baseline. There is now also a Water Vision for Europe, developed by non-profit organisation The European Water Partnership.
However, a recent survey of Global 500 firms by not-for-profit organisation CDP found that while two-thirds of respondents had targets for internal water management within their direct operations, just four per cent had set goals for managing water risks in their supply chains.
The issue has also sparked controversy. Last year, Peter Brabeck, chairman of Nestlé, the world’s largest seller of bottled water, and a leading force in developing the Water Resources Group which is seeking to bring governments, businesses and civil society together to find water solutions, was widely seen in a video clip circulating on the Internet.
On it, he stated that declaring water a right is ‘extreme’ and asserting that water is a foodstuff best valued and distributed by the free market. Brabeck later stressed on his blog that the clip had taken his views out of context and emphasised that ‘the water you need for survival is a human right and must be made available to everyone, wherever they are, even if they cannot afford to pay for it’.
In an interview with The Guardian, he said water is now a scarcer commodity globally than oil, gas and coal in terms of proven reserves compared to human need and that governments worldwide have a duty to provide people with the five litres of water needed for daily hydration and 25 litres for minimum hygiene.
However, he added: ‘This amount of water accounts for 1.5 per cent of the total water which is for all human usage. Where I have an issue is that the 98.5 per cent of the water we are using, which is for everything else, is not a human right and because we treat it as one, we are using it in an irresponsible manner, although it is the most precious resource we have.
If you’re importing fruit or vegetables from Africa or parts of Asia, you are effectively importing water and exporting drought
‘If you look back to when I was born [in 1945] there were 2.7 billion people and we were not even using 40 per cent of the renewable water but by seven billion we are already over-using it and if we are going to be up to ten billion, we have to change our relationship with this resource.’
In Britain, where the per capita consumption of water is currently a generous 150 litres per person per day, Gillespie sees two main reasons for companies to develop water strategies. Firstly, it is basic housekeeping, enabling efficiency savings, albeit smaller ones than are produced through effective carbon management. Secondly, there is reputational risk involved, even for companies with no overseas employees.
‘There’s an issue of embodied water,’ says Gillespie. ‘If you’re importing fruit or vegetables from Africa or parts of Asia, you are effectively importing water and exporting drought.’
As for what should be in a water strategy? Gillespie says it should look at an organisation’s ‘water footprint’ in a similar fashion to that employed to measure direct and indirect carbon consumption. Issues that should be covered include drainage, waste water recycling and water use in the supply chain. ‘Is there a sustainable management plan for the use of water in your organisation?’ he asks.
There’s a long way to go, however. While charities such as WaterWise and WaterAid have helped advance the issue, Britain still does not have a specialist water sustainability programme or a set of national standards, in the same way as exists for carbon. Sarni adds that a problem is that, while water strategy is a global topic, it often gets ‘loaded into the ‘local issues category’ for many companies.’
‘People think they know about water management but typically they treat it as a resource within their factory walls. To really understand water stewardship, you need to think about water outside,’ he says.
One tonne of carbon in China is the same as one tonne of carbon in the US. With water it’s different. Water is location-specific.
What’s needed, he argues, is a concept of ‘water stewardship’ to match the status of carbon management, encompassing physical, product-related, regulatory and reputational risks.
‘It’s fairly similar to carbon management in that it involves companies taking a holistic view of their risks. You have to manage compliance issues and you have to look at the implications along your supply and sourcing chains,’ he says.
‘But the fundamental difference between carbon management and water stewardship is that water is not fungible. One tonne of carbon in China is the same as one tonne of carbon in the US. With water it’s different. Water is location-specific. That has to govern how you think about water stewardship. There has to be a social dimension to it. Everyone needs water. You can’t do anything without water.’
Peter Kendall, outgoing president of The National Farmers Union, agrees. ‘The smart use of water is absolutely fundamental. There are some people doing really exciting things with computer-controlled irrigation and hydroponics.
‘If I was to talk about water being scarce in the UK today I think people would wonder if I’d lost my marbles but we need water in the right place at the right time in the right quantities.’
Britain’s aquifers right now might be bursting but this is an issue that looks to be here to stay.
This article first appeared in Issue 85