Organizations face growing pressure today to reduce the environmental impact of their activities. They must also consider how their decisions and actions will affect people and planet outside the organization’s walls. This is particularly important for companies operating in global supply chains. In global trade, virtually every product has a serial number—and that number is its footprint. The amount of resources required to make and transport a unit of product determines its footprint – and that goes for water too.
What is a Corporate Water Footprint?
A corporate water footprint is the volume of water used in the extraction, transportation, processing, and use of its products, throughout their lifecycle. It is calculated by multiplying the amount of water needed to produce a product by its lifetime in production and use. Water footprints are different from carbon footprints, which are used to assess the level of carbon dioxide emissions caused by a product throughout its lifecycle — emissions caused by the extraction of the raw materials for a product, the transportation of the product, and the use of the product. Harvard Law School’s Forum on Corporate Governance predicts that in 2023 disclosure of water metrics will come a very close second to emissions-related disclosures
Why Track a Corporate Water Footprint?
We track corporate water footprints to help companies understand their water footprint and identify ways to reduce their water footprint. It’s important for companies to assess the impact of their operations on water resources because water availability is a growing concern around the world. McKinsey analysis shows that by 2030, demand for water will outstrip supply by 40 per cent, and that about half of the world’s population will live in water-scarce areas.
But in the here and now, California is an example for where water use is projected to outstrip supply increasingly often, thanks in part to an increase in food production across the state. At the beginning of 2022, California’s water supply reservoirs were critically low. The top five reservoirs in the state, which together represent more than 70% of total storage in major California reservoirs, were at just one-third full, and at 59% of their historical average levels as of the beginning of the calendar year.
Companies can use corporate water footprints to inform their strategy by identifying areas where they can reduce water use and costs. They can also use this information to identify suppliers who use less water. These are usually tracked via publicly available online footprint calculators, in-house databases or custom-designed software solutions which record the amount of water and other resources your company uses to generate its products and services and how much water is used during production, transportation, and end-use.
Water Scarcity and Supply Chain Risk
Water scarcity is a major global issue that is certain to get worse in the future, and of course that will have implications for the global supply chain. Back in 2021, analysts at Barclays identified water scarcity as “the most important environmental concern” for the global consumer staples sector, which includes everything from food and beverages to agriculture and tobacco.
As the world population continues to grow and demand for water increases, water will become increasingly scarce. This will lead to water shortages, which in turn will create a water scarcity supply chain risk. This risk refers to the potential for disruptions in the water supply chain, which could have serious consequences for businesses and consumers.
Some of the most common disruptions in the water supply chain include water theft, contamination, and infrastructure failures. Water theft occurs when people or businesses illegally access or exploit water resources that are not theirs. Contamination refers to the contamination of water resources by environmental pollutants or hazardous materials. Infrastructure failures can include leaks, floods, or earthquakes that damage or destroy sanitation systems or water mains.
As you can see, water scarcity is a serious global issue that is definitely going to be more severe in the future. If you’re concerned about the potential for disruptions in the water supply chain, it’s important to consider your business’ exposure to this risk. By understanding your company’s water footprint, you can identify where you have the greatest risk and make sure that you’re taking steps to mitigate that risk.
Working To Combat Water Scarcity
There’s no question that the global water crisis is an urgent and pressing issue. In fact, it’s been declared the biggest crisis of the 21st century. The simple fact of the matter is that we are not doing nearly enough to solve the problem. In fact, we’re actually doing the opposite. We are supporting industries that use water wastefully, and we are building more and more dams and reservoirs that block natural water flows.
Fortunately, some companies are working to solve the global water crisis. They are looking for ways to reduce water waste, find new sources of water, and build sustainable infrastructure. They believe that it is possible to solve the global water crisis, and they are fighting to make that happen. If you’re interested in helping to solve the global water crisis, these are the companies you should support.
Companies Leading The Way
– PepsiCo, which announced in 2021 that it will be tackling wastewater in the areas it operates
– Microsoft, which is working towards being water positive by 2030 by replenishing more water than it uses, investing in relevant projects, and using its technology and AI for Earth Program to help revive water replenishment.
– Google, which has pledged to support water security and replenish around 120% of the water it consumes by 2030. The tech giant aims to make clean water more accessible and secure in communities that are at the sharp end of the global water crisis and to use its technologies to help predict and prevent water problems worldwide.
– Reckitt Benckiser, which plans to be “water positive” in water-stressed locations (it currently has 20 such sites) by 2030. The company has started a series of “listening sessions” with key stakeholders to discuss climate change and water risk.
– AB InBev, the world’s largest brewer, said that his company has recognized for some time that water problems are local problems. The company depends on water, so it has been working on water conservation for several years, in partnership with the local communities in which the company operates. Now that widespread data is readily available, the company reports that there are economic benefits to using less water as well as many benefits for the community too. (see )
Summing Up
In the race to bend the curve on climate change, carbon emissions have dominated the global environmental agenda. However, in recent years the global corporate water footprint and water scarcity have gained increasing importance in the sustainability agenda. At Permutable, we expect to see the global corporate water footprint taking increasingly centre stage in sustainability efforts this year, and companies being scrutinized for unsustainable water use.