The private sector is starting to feel the pain of the global water crisis. Last year, the World Economic Forum ranked water crises as the most damaging short-term risk, and this year, as the top global risk to industry and society over the next decade. In 2015 alone, 27 percent of companies disclosing to CDP Water reported detrimental water-related business impacts, including loss of revenue, increased capital expenditure, and decreasing profits, to name a few.
At the Paris climate summit in December, 114 multinational companies joined together in committing to use the best science as the basis for setting greenhouse gas emissions reduction targets. Targets informed by science might well be effective in reducing risks posed by water as well.
However, there is no consensus on the best way to set targets for water that help reduce business risk. Three major hurdles stand in the way:
1. Location matters.
In the case of greenhouse gas emissions, the effects on the atmosphere are the same regardless of their location, and therefore so are targets. Where water is used and discharged is critical to determining the associated risks and threats to water availability, creating the need for location-specific targets across a value chain.
While there is an international call to action to limit global warming to less than 2 degrees C (3.6 degrees F) by 2100 to avoid the worst effects of a changing climate, no such world-spanning vision exists for water.
So far, corporations have set water targets that are the same from one region to the next, driven by industry benchmarking and what can be achieved – not what needs to be achieved – through incremental improvements in efficiency, the deployment of existing technology and investments in NGO partnerships. While these targets are a step in the right direction, they could fall short without further insight into what is actually needed in each watershed and aquifer, and thus fail to reduce long-term water-related business risks.
But times are changing, and with the growing global appetite for meaningful targets to reduce emissions comes increased interest in setting water targets that help solve the world’s water challenges and mitigate business risks. For example, World Resources Institute has been working with Mars Inc., the privately-held multinational food producer, to develop a conceptual approach for setting water targets informed by science, and measuring impacts and tracking performance over time. The approach aims to overcome the hurdles described above, by being:
Targets should be set for each location across a value chain, from raw material sourcing to manufacturing and consumer product use, driven by the unique watershed and aquifer conditions and allowing for prioritization based on location-specific impacts and risks.
2. Focused on key challenges:
An ecosystem of metrics and indicators could help set targets and measure progress across all impact categories, including water quantity, water quality, human rights, and water-related ecosystems, while allowing companies to track progress with a single enterprise-wide metric.
3. Informed by the best science:
The level of ambition for water targets should align with existing water policy targets and goals in each watershed, and be informed by the company’s share of responsibility in reversing water impacts. The latest science can help support that calculation and a growing body of literature is now available to inform the magnitude of change required to collectively ensure long-term water availability in every watershed and aquifer around the globe.
For this approach to succeed, companies will have to engage other water users across sectors, because reducing impacts from only one company within a watershed will do little to lessen water challenges and business risk. Put simply, companies can’t afford to be clean fish in a dirty pond; they need a clean pond to survive. Despite skepticism about this kind of collaborative strategy, ecosystems, governments and communities might have more to gain from positive, meaningful action from corporations than from having them remain indifferent, or worse, simply pack their bags and leave.
At this point, companies have had to rely on limited information and a lack of consensus when setting targets to deal with growing water risks. As corporate aspirations shift from what can be done to what needs to be done, setting water targets informed by science promises a new opportunity to reduce business risks, support the global development agenda and ensure long-term water availability.