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Business Response to Water as a Strategic Issue

Business Response to Water as a Strategic Issue

At the end of last year we signed a Memorandum of Understanding with the United Nations Industrial Development Organization (UNIDO) to cooperate on joint development of a water footprint self-assessment tool.  The idea is to assist small to medium size enterprises (SMEs) to evaluate their water footprint in the early stages of the life cycle – from sourcing to raw material processing and production.

The choice of making a tool for small to medium enterprises’ water footprint is no coincidence – they represent 97 per cent of all businesses globally. A change in their individual and combined water footprint will have a great impact on water resources in local communities, regions and ultimately, the whole planet.

Ultimate goal; a sustainable trail of footprints

Most people are more familiar with the term “carbon footprint” as a consistent means to quantify greenhouse gas emissions. A water footprint is similar, as it is a metric that quantifies potential water-related environmental impacts in the different steps of the supply chain of a given product, taking into account water consumption, used or wastewater treatment and/or discharged water.

When businesses implement a greenhouse gas (GHG) management strategy, a carbon emission could occur in one place and be offset by carbon reduction somewhere else, because GHG emissions have a global impact. But, for a water strategy, the focus is more location-specific, as water use creates a local impact that can only be mitigated in the same place. What’s more, increasingly scarce water resources are typically shared between a number of users including local communities, agriculture, natural habitats and industry. So, although water footprints focus on environmental aspects, they can also be relevant in managing social impact because they can provide insight into conflicting or competing demands for limited water resources.

Increasingly, we are facing up to how these different forms of impact are interconnected – for example, water treatment can be energy intensive. So, it is important not think too narrowly when it comes to understanding the ways in which consumer products have sustainability impacts. Moving forwards, understanding the linkages between water, energy and carbon management strategies will be just as important as quantifying the individual elements. A joined up approach to product manufacture will be key to effective corporate sustainability. A strategic approach that addresses the whole water, carbon and energy requirements throughout the supply chain is needed.

Water footprint self-assessment tool

The water footprint self-assessment tool we are developing for SME’s in cooperation with UNIDO – and supported by the Water Footprint Network, is based on a life cycle approach for assessing, understanding and reporting water footprints, including the possibility of a scenario-based assessment of an organization’s exposure to water risks. The approach we are developing should also support development of verifiable data that can be incorporated in more comprehensive water footprint assessments – and by increasing the consistency and rigour behind the data this will increase the chance that the outputs can meet stakeholder requirements.

To avoid proliferation of initiatives and standards already available we plan to build further on existing work, for example around Product Category Rules for life cycle assessment. The tool will potentially enable SME’s to report water consumption and ultimately be integrated into management tools that allow an adaptive approach to local conditions, combining water with other environmental issues like land use, energy consumption and GHGs.

The risks involved

Why is strategic water management so important? Many leading thinkers see water as the visible face of climate change. In a report presented in January 2014 by the Joint program on the science and policy of global change at Massachusetts Institute of technology (MIT) the researchers expect 52 per cent (5 billion people) of the world’s projected 9.7 billion people to live in water-stressed areas by 2050. They also expect about 1 billion more people to be living in areas where water demand exceeds surface-water supply. A large portion of these regions already face water stress – most notably India, Northern Africa and the Middle East. The study applies the ability to assess both changing climate and socioeconomics. They found that population and economic growth are responsible for most of the increased water stress. Such changes can lead to an additional 1.8 billion people globally living in water-stressed regions. It is not unreasonable to expect water prices to rise significantly in this scenario, perhaps even mirroring the acute recent price rises of other resources such as oil and natural gas. Given this report’s findings, we must expect ‘access to affordable water resources’ to become increasingly pressing. Most likely water scarcity will become a key geopolitical issue in the decades ahead, and one which will have significant implications for corporate sustainability, in the widest sense.

The way ahead

In conclusion, water footprinting will enable us to better understand the impacts of business on water resources – and identify good and bad practice.  This insight means that we will be able to set more meaningful targets and goals which can underpin more sustainable and resilient operations, for example by decoupling water stress from economic growth.

Water footprints will provide data that can be used to assess broader risks such as business continuity, social license to operate and brand value, all of which are increasingly becoming key drivers of investor interest.

We are currently in the scoping process. When the development and testing phase is finished we plan to launch the tool later in 2014 through the UNIDO project.

In addition to making its contribution to improving corporate sustainability data, this experience has supported DNV GL to further develop its water footprint verification services, in line with ISO/DIS 14046 (Environmental management – Water footprint – Principles, requirements and guidelines). LG Electronics recently announced on their web-site the work we have done on their washing machine (Model F14A8QDA), which is the first in the global home appliance industry to receive the Water Footprint verification according to the methodology we applied

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