RW

Reducing Shared Water Risk

The world’s freshwater supply can meet growing demand through effective risk assessment and management between all stakeholders, with increased participation from business.

The Problem: Under a “business-as-usual” scenario, water demand will increase 55% globally by 2050 with a 40% supply gap expected by 2030.

The Solution: Businesses can reduce impending shared water risk through assessment and implementation of water management plans that address sections of their value chain where water is most material and exposure to risk is greatest.

Actions by business will focus on reducing shared risk across the value chain, addressing challenges relevant to their business, such as:

  • Increasing water use efficiency across key points of the agricultural value chain.

  • Eliminating untreated industrial wastewater discharge.

  • Increasing equitable and sustainable access to safe water, sanitation and hygiene (WASH).

The Business Case

  • It lowers operating costs. Better water management means lower consumption and lower expenses. It also helps businesses avoid costs from penalties and litigation.

  • It improves enterprise risk management. By assessing and mitigating water risks upfront, companies reduce reputational risks that jeopardize their license to operate, and operational risk resulting from inadequate water availability, surplus water or flooding, water quality or inadequate management.

  • It improves investor relations. Investors and markets concerned with the growing water supply gap will want to know that business operations fully account for shared water risk. This enhances company reputation and investor confidence as well as access to capital.

  • It reinforces corporate sustainability values. Taking water risk seriously demonstrates a commitment to upholding corporate values and ethics.

  • It makes business part of the solution. Water risk assessment frameworks provide for participation by businesses in local water governance. This gives business a voice in water allocation and public infrastructure planning.

  • It improves decision-making. Better management decisions based on the true value of water and business value at risk will guide companies toward better investment and capital allocation decisions.

Timeline

Phase 1

  • Corporate water risk assessment across direct operations and/or supply chain depending on where water is most material.

  • Identification of most at-risk areas based on business value at risk, value of water and materiality.

Phase 2

  • Development of a comprehensive water strategy, including implementation of local action plans across operations and/or supply chain, responding to risks and seeking business opportunities with other water users in the watershed.

Phase 3

  • Implementation of water stewardship strategies at the enterprise and local level.

  • Engage outside the company/supplier fence line to seek risk reduction opportunities with other users in the watersheds (i.e., collective action initiatives to reduce share water risks).

Enablers

  • Policy. Incentivizing the reduction of shared water risk, for example, through recognition of the true value of water.

  • Awareness, Capacity Building, Education. Development of guidelines for the implementation, evaluation and measurement of good water practices.

Metrics

Examples of Metrics

  • Application of existing standards.

  • Establishment of partnerships (via existing or new platforms).

  • Disclosure via CDP Water Program and other corporate reporting frameworks.

Examples of Water Stewardship and Management Frameworks

  • Alliance for Water Stewardship Standard

  • European Water Stewardship Standard

  • Australian Water Stewardship Standard

  • EU Water Framework Directive

  • UN Global Compact CEO Water Mandate

  • OECD Principles on Water Governance

Relevant priority areas

Jointly developed with: