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Water risk for business
Considering and mitigating the water footprint of your business is a way to reduce risk.
- Physical risk: companies may increasingly face freshwater shortage in their supply chain or own operations.
- Reputational risk: the corporate image of a company will be damaged when questions arise among the public about whether
the company properly addresses issues of sustainable and equitable water use.
- Regulatory risk: governmental interference and regulation in the area of water use will undoubtedly increase.
- Financial risk: above risks may translate into increased costs and/or reduced revenues.
Water opportunity for business
Risks can turn into an opportunity for those companies that proactively respond to the challenge of global freshwater scarcity.
Frontrunners that create product transparency before others do, that formulate specific and measurable targets with respect to
water footprint reduction, with special attention to areas where problems of water scarcity and pollution are most critical, and
that can demonstrate actual improvements, can turn this into a competitive advantage.
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Corporate social responsibility
Reducing the water footprint should be part of the environmental strategy of a business, just like reducing the carbon footprint.
Addressing the issues of freshwater scarcity and pollution is part of the corporate social responsibility.
Water footprint: one global standard
A shared standard on definitions and calculation methods is crucial given the rapidly growing interest in companies and governments
to use water footprint accounts as a basis for formulating sustainable water strategies and policies. The water footprint is an
effective tool only when used in a rigid manner, not when used as a metaphor. The water footprint calculation standard is contained
in the Water Footprint Assessment Manual.
What’s new for companies?
- Companies have traditionally focussed on water use in their operations, not in their supply-chain. The water footprint does take an integrated
approach. Most companies will discover that their supply-chain water footprint is much larger than their operational water footprint. As a result,
companies may conclude that it is more cost effective to shift investments from efforts to reduce their operational water use to efforts to reduce
their supply-chain water footprint and associated risks.
- Companies have traditionally looked at reduction of water withdrawals. The water footprint shows water use not in terms of withdrawal but in
terms of consumptive water use. Return flows can be reused, so it makes sense to specifically look at consumptive use.
- Companies make sure that they have a water use right or license. Having that is not sufficient to manage water-related risks. It is useful to
look into the spatiotemporal details of a company’s water footprint, because details on where and when water is used can be used as input to a
detailed water footprint sustainability assessment, to identify the environmental, social and economic impacts and to find out associated business
risks.
- Companies have traditionally looked at meeting emission standards. The grey water footprint looks at the required water volume for assimilating
waste based on ambient water quality standards. Meeting emission standards is one thing, but looking at how effluents actually result in reduced
assimilation capacity of ambient freshwater bodies and at business risks associated to that is another thing.
What can your company do?
Your company can reduce its operational water footprint by saving water in its own operations and bringing water pollution to zero.
Keywords are: reduce, recycle and treat before disposal. The operational water footprint can generally brought back to nearly zero.
For most businesses, however, the supply-chain water footprint is much larger than the operation footprint. It is therefore crucial
that your company address that as well. Achieving improvements in the supply chain may be more difficult – because not under direct
control – but they may be more effective.
Your company can cut its supply-chain water footprint by making supply agreements with certain standards with its suppliers or by simply changing
to another supplier. In many cases it probably means quite something, because the whole business model may need to be transformed in order to
incorporate or better control supply chains and to make supply chains fully transparent to consumers. Among the various alternative or supplementary
tools that can help improving transparency are: setting quantitative water-footprint reduction targets, benchmarking, product labelling, certification
and water footprint reporting.
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