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Water Security and Business This page outlines why water security is a key challenge facing large corporate water users and how it affects their business. (Part I of III in this series)

THE RELEVANCE OF WATER SECURITY TO THE BUSINESS SECTOR

Each year the World Economic Forum releases a Global Risks Report, based on an exhaustive survey of over 1000 business leaders worldwide. In the 2021 report, extreme weather, climate action failure and human environmental damage were the top three risks identified by likelihood. On top of this, biodiversity loss and natural resource crises came in the top ten risks by impact. Water crises have ranked as one of the top five risks to economies annually since 2012 (now categorized under "natural resource crises").

Likelihood and impact of certain key risks in 2021. Source: World Economic Forum

For businesses with high water dependency, such as food and beverage companies, the stakes are particularly high. Consider the global beverage industry, which is expected to reach nearly $2 trillion in value by 2021. A 2017 study showed that if companies fully absorbed the full costs of water availability and water quality impairment, this could equate to an average decline in profits of 116% for food and beverage companies.

Water Risks to Business. Source: CEO Water Mandate

James Quincey, CEO of The Coca-Cola Company, speaks to why water security is essential to their business.

Worse still, according to the World Economic Forum, at the current rate (business as usual), there will be a 40% gap between global water supply and demand by 2030 (WEF, 2017).

Estimated change in GDP due to water scarcity — business as usual vs. efficient water polices. The image on the left predicts changes in water availability if no meaningful measures are taken. Source: World Resources Institute.

WHAT IS WATER SECURITY AND WHERE IS THE CHALLENGE?

The Asian Development Bank (ADB, 2013) says that societies can enjoy water security when they successfully manage their water resources and services to satisfy household water and sanitation needs in all communities; support productive economies in agriculture, industry, and energy; develop vibrant, livable cities and towns; restore healthy rivers and ecosystems; and build resilient communities that can adapt to change.

Yet there are many societies that fall short of this ideal — 25% of the world’s population now live in countries that face extremely high levels of baseline water stress (WRI, 2019).

Already, the World Business Council for Sustainable Development estimates that water shortages cost the global economy over US$323 billion annually. To put this into perspective, this is roughly double the value of the entire global wheat harvest (FAO, 2018).

Arguably, the topic of water security is heavily connected to all six of the top environmental risks identified in the WEF’s 2019 Global Risks Report.

By improving water security, businesses can help address some of these key risks.

The extent to which improved water security can address some of the top 10 risks in The World Economic Forum’s The Global Risk Report 2019 (scale = 1–3). Source: TNC

WHAT CAN BUSINESSES DO ABOUT IT?

One action businesses can take to improve water security in the basins they operate in and source from is to set progressive and forward-thinking water targets. Targets should be context-based and should:

1. Respond to priority water challenges within the catchment;

  • Challenges may include access to water, health and sanitation; water quality and quantity; water governance; and extreme weather events.

2. Be informed by site’s contribution to water challenges and desired conditions;

  • For example, a company looking to address the challenge of water quality should figure out how much a site contributes to decreased water quality in the catchment, understand what the desired water quality condition should look like, and then take action according to the company’s contribution to decreased water quality.

3. Reduce water risk, capitalize on opportunities, and contribute to public sector priorities.

Companies Investing in Nature : AB InBev Improving Water Security and Stewardship

TNC is working with diverse stakeholders, including Anheuser-Busch InBev (AB InBev), to improve watershed stewardship around the world. Our goal is to help companies embed water stewardship into their facility operations and supply chains to ensure more reliable water supplies for all.

Globally, TNC and AB InBev have partnered to:

  • Develop a measurement framework and guide to evaluate the impact of our joint efforts in high risk sites around the world;
  • Ensure new and existing water stewardship projects, like water funds in Latin America, increase in scale and improve in efficiency while sharing best practices across different regions;
  • Implement trainings to build water stewardship knowledge and capacity across AB InBev, globally; and
  • Capture the impact of investments in watershed protection.

Around the world, TNC’s collaboration with AB InBev and the Anheuser-Busch Foundation is improving stewardship of vital freshwater sources for the communities and ecosystems that depend on them. Learn more here.

COLLECTIVE ACTION TO INCREASE IMPACT

Watersheds are home to a diverse mix of water users with unique interests. Consequently, one stakeholder cannot drive progress toward reaching a sustainable watershed unilaterally. Thus, any efforts to address water security at scale require multi-sector collaboration, involving the private and public sectors, and civil society.

Collective action can further public sector priorities and minimize negative impact to watershed health while improving water security through nature-based solutions. Nature-based solutions offer some of the most effective and sustainable ways to improve water security, and they frequently offer additional benefits for communities where they are implemented, including improved agriculture, job creation and climate resilience. Find out why a business should care about nature-based solutions here.

When considering the benefits and challenges of collective action, stakeholders should consider two trade-offs: time and impact.

Collective action may take longer to show results, but is high-impact. Importantly, lesser impact interventions may not be sufficient to change from ‘business as usual’ projections, even though they may deliver more quickly. Likely a mix of approaches is to be recommended. Source: TNC

For more information on collective action to address water security, please see "Collective Action to Address Water Security" (Part II of III in this package) and "Collective Action and Water Funds" (Part III of III in this package).

OTHER RESOURCES ON BUSINESS AND WATER SECURITY

For other resources to help address water security, please see the following:

For more information, please contact water.tnc@gmail.com.