Istanbul, Mar.18 (WWF): A world running short of water is presenting a new category of risk to business that many have not even begun to appreciate, the World Water Forum in Istanbul was told today.
And while some leading companies have made great improvements in using water more efficiently in their own operations, they will need to look deep into their supply chains and into the performance of water regulators, warned WWF and noted US-based water research body, the Pacific Institute.
“If you are an efficient business sitting in a poorly managed river basin you are still exposed to extremely high water risk,” said Stuart Orr, freshwater manager at WWF International.
Water is so basic a commodity that many businesses do not realise the extent to which disruptions in supply or increases in price – both predicted with increasing frequency – can effect their operations.
“The companies that will best shield themselves from the unexpected will be those that have assessed water requirements and risks in both their direct and indirect operations and in an integrated way with other emerging risk categories such as with climate and energy,” said Jason Morrison, program director at the Pacific Institute.
Morrison used an example of a brewery in an area where climate change had impacted heavily on water supplies. The company not only found unexpected cost increases and reductions in its own water supplies but also rapid increases in energy costs as hydroelectric generation capacity was reduced and difficulties in sourcing barly and hops as water-short farmers put land into fallow.
“Water risk assessment should include physical risks, such as running out of water, and reputational risks where companies can be perceived as irresponsible users of a scarce resource by communities, consumers of their products, regulators or financiers,” said Morrison.
“Companies should also consider the risk of more onerous and costly regulation and financial risks as water shortages translate into higher energy prices, higher insurance and credit costs and lower investor confidence.”
The growth in instruments such as water footprint studies and industry standards for water use and discharges was an encouraging sign, but business, often together with civil society, should also become involved in urging better water policy and management overall, Orr said.
“It will be better for business to be seen making a positive contribution to public policy processes over water in a climate of water shortages rather than as a powerful player interested mainly in grabbing or defending its share of water,” Orr said.
Business involvement in improved water management can include advocacy and lobbying for better policies in company with civil society and communities, infrastructure and other partnerships with governments and water authorities, and financial support for infrastructure and capacity building, a key factor in the developing world.
