People, economies and nature – they all depend on water. But by 2025, UNESCO predicts that water demands for two-thirds of the world’s population will exceed the available supply. In a world of increasingly severe water scarcity and pollution, it’s essential we improve how we manage freshwater resources right now.
Businesses of every kind and in every sector will face serious risks, but also compelling opportunities. So whether it’s in your strategy or not, your company can expect to be grappling with water-related issues of one kind or another within a few short years, if you’re not already doing so. Here’s why…
1. As the global population increases, there will be less water to go around
Our planet is heading towards a human population of almost 10 billion by 2050. More people equals more houses, more infrastructure and much greater demand for water. Much of this population growth is happening in parts of the world already facing water stress. This will present all kinds of water-related challenges for people, businesses and supply chains: from lack of water to make products, or the impact of flooding and pollution, to the reputational and financial implications of doing things wrong or not being prepared.
We know that balancing resources for growth is a delicate art. In April, the Chinese government suspended permits for new coal plants in a majority of provinces – a win for climate action, right? But a statement released by the National Energy Administration cited ‘lack of water resources’ as a contributing factor.
The challenge is only set to grow. As intensive agriculture expands we see fertile soil eroding at an alarming rate of 24bn tonnes a year and already a third of our planet’s land is severely degraded. The links between water and soil cannot be ignored; intensive farming leaves top soil vulnerable to increased erosion, carrying pesticides and other chemicals into our waterways, increasing pollution and sedimentation. The knock on effects of this are widespread, and can include increased risk of flooding as well as greater pressure on remaining fertile land.
In the UK, Coca-Cola’s long-standing partnership with WWF, has repaired soils and replenished hundreds of millions of litres of water in chalkstream rivers – a unique and precious habitat for wildlife that’s only found in England and a small area of northern France. Projects like this are helping secure water resources for future generations of people and businesses.
2. Businesses are key to achieving the Sustainable Development Goals and Paris Agreement. And there will be market opportunities along the way
You can’t ignore them: global frameworks, collaborations and partnerships are all the rage. Your business is almost certainly already aligning to them, or is planning to, and your customers and employees will increasingly want to know what part you’re playing.
Climate, water and economic development are intertwined. Climate change is likely to have made the recent hurricanes in the US and Caribbean more extreme, and the Met Office has warned it will make the record winter rains and floods we’ll increasingly face here in the UK more intense, and therefore more costly. Conversely, there is an increasing likelihood of drought, which if left unaddressed could reduce UK GDP by £35 billion with 354,000 potential job losses.
Effective management and protection of the natural environment is key to reducing water risks facing business, whether that’s through flooding, drought, pollution or damaged reputations. In the UK, farming businesses and water supply companies have a key role to play, such as reducing demand for water and preventing over-abstraction from rivers and groundwater as well as reducing pollution. In addition, good water management can help tackle the causes of climate change. CDP’s (Formerly Carbon Disclosure Project) 2016 Water Report states that 24% of greenhouse gas emission reduction activities rely on a stable supply of good quality water.
Businesses that develop a commercial strategy with the SDGs and Paris in mind, rather than treating them as a CSR tick-box exercise, could unlock a wealth of opportunity. According to the Business and Sustainable Development Commission’s Better Business, Better World report, achieving the SDGs could unlock $12 trillion of market opportunities.
2020 will be a landmark year for both Paris and the SDGs, where the international community will review its collective progress and recalibrate its ambitions for 2030. What we do now is crucial in determining the mood of those conversations.
3. Governments listen to businesses
With the post-Brexit fate of all EU environmental legislation related to water and the environment still undetermined, now is the time to influence UK water policy. The Withdrawal Bill states that much of the environmental legislation we have will simply be transposed, however agricultural legislation – which heavily affects the environment and depends on water use – is set to change.
We’ve already started the conversation. WWF’s Nature Needs You campaign and other initiatives are engaging the private sector with events, workshops and setting up a dialogue between business leaders and the government, aimed at levelling the playing field for the companies already doing the right thing and pushing for policy that drives greater investment in sustainable business models.
Other UK regulation affecting water is also under review. Ofwat, the UK water services regulation authority, must ‘set the price, investment and service package that customers receive’. The 2019 price review (PR19) is under way. In July 2017 the consultation began, with final limits set in December 2019. PR19 is a vital step in delivering environmental benefits in England and Wales – where only 20% of water bodies currently achieve ‘good ecological status’. 2019 is also the date set for the EC review of the Water Framework Directive (WFD) and both these processes should offer a chance for businesses to give their input and set out why good water management underpins the sustainability of their business.
4. Water attracts investor interest
With the framework provided by PR19, the WFD and the nature directives, the UK water sector has a basis to develop business plans that allow them to meet all of our needs – something they will be doing over the next 18 months. Last time round there was a whopping £42 billion invested, which is why these plans present attractive investment opportunities, as explained by Arnaud Bisschop at Pictet Water fund, in this 2016 article.
The water sector still needs to get a grip on issues like over-abstraction and sewer overflows, but many see it as a solid investment. In the UK, WWF are working as part of The Blueprint for Water to make sure key environmental priorities are considered in the business plans.
It isn’t just about water companies though, investors and global businesses are already feeling the financial impact of water risk. The latest Ceres report, Feeding Ourselves Thirsty, details the challenges faced by food companies and the damage water can do to their market value if not managed properly.
5. The tools and models you need already exist, so there’s no excuse for inaction!
Companies with agricultural supply chains ought to be aware of all the many smart water management tools that are out there, from satellite imagery and data-based tools, to groundwater monitoring and precision agriculture.
At WWF we challenge business to take a water stewardship approach. We get them to think and act differently and connect them with others in water catchments to seek collaborative solutions to water management. In the UK we have set out guidance for the food and drinks supply chain that wish to engage in water stewardship. It begins with awareness, then effective utilisation of the water risk filter, and leads to a circular approach to restoring habitats and promoting good governance. Businesses like SABMiller (now taken over by AB InBev) and M&S have successfully used these tools to take a water stewardship approach to managing water risks globally.
Elsewhere we’ve brought businesses together pre-competitively to build resilience into global supply chains. In India, WWF has the Ganges Leather Buyers Platform, where international businesses that source leather from India can collectively address pollution and water use issues. In the food and drink sector, WWF is working with the Courtauld Commitment 2025 to design and implement a water stewardship approach to the water commitment which will see business take action together in water risk hot spots around the world.
So whether a business has no choice but to mitigate its water risks or chooses to grasp a market opportunity, the case for action on water is clear. With only 1% of the world’s freshwater available for people to use, the decisions we make now will determine whether this resource can be managed for the long-term benefit of people, business and nature.
WWF is building a future where people and nature thrive by helping businesses work in ways that protect the natural world they depend on. Subscribe to our One Planet Business newsletter for updates and inspiration on corporate sustainability.