Acknowledging the challenge that water crisis poses for business, Pacific Institute and VOX Global surveyed 50 U.S.-based companies representing every major business sector to gather information on how businesses perceive and respond to that challenge. The majority of companies surveyed were Fortune 500 and publicly-traded companies, and follow-on interviews were conducted with representatives from AT&T, Cummins, Inc., The Hershey Company, MillerCoors, and Union Pacific Railroad.
Their findings reveal that businesses recognize water risks and the related challenges, but there is a gap between attitude and action—most businesses do not have plans to expand their water risk mitigation measures.
A vast majority of the survey respondents see water as a current problem, and an even greater number expect it to be a problem within the next five years. In addition, 60% believe water issues are ripe to negatively impact growth and profitability within five years, and 80% say that water issues will affect decisions about where to located facilities. Five years ago, less than 20% of companies believed that water issues affected growth and profitability.
“Water challenges are not just for developing countries; they are happening here in the United States,” said Jason Morrison, Program Director of the Pacific Institute. “While the current California drought gets considerable attention, many regions face a chronic imbalance between water supply and demand.”
Researchers discussed the localized nature of water challenges and there finding that a one-size-fits-all solution does not work. As a result, most companies have a multi-pronged approach to water management that includes reducing demands, monitoring, reporting their efforts and engaging with stakeholders.
The localized natural of water challenges is also a potential reason why many companies don’t have centralized water management strategies. However, the gap between concern and action largely driven by internal obstacles, including a lack of time to raise awareness and buy-in and other risks taking priority.
“Business leaders we surveyed pointed to two significant internal obstacles that hinder companywide buy-in to water: lack of time to raise awareness and buy-in and other risks ranking as a higher, more immediate priority,” said Tony Calandro, Senior Partner and leader of the VOX Corporate Sustainability and Social Responsibility Practice Group.
To bridge this gap, Pacific Institute and VOX Global developed a four-point list of steps that can be taken to develop “a strategic response to growing water-risks” and including:
- Measuring, assessing and reporting—which is described as measuring actual operational water use and discharges and using a corporate water assessment and reporting tool to put that information into context.
- Building the business case for action—researchers recommend stating the problem in terms of actual impact on the business (how it affects growth, profitability and license to operation), rather than in terms of “sustainability.”
- Communicating with stakeholders—this includes disclosing the risks and impacts that have been identified and having an open dialog, which fosters credibility and trust and sets the stage for developing collaborative solutions.
- Working with others—work collectively with advocacy groups and stakeholders who can provide expertise, and work with communities to so that water risk does not become a “license to operate” issue.
Visit the Managing Water Risk website to access the report, executive summary, “Steps Companies Can Take to Bridge the Gap,” and more.
Written by: Marta Weismann