The motivation and objectives of this report are to compile and communicate the scientific evidence about water risk in a way that informs investor decision-making. The results of this undertaking are clear: the private sector is an integral component of the water cycle, directly influencing water quality, quantity, and distribution around the world. As presented in this report, current industry practices are leading to severe and systemic impacts to freshwater resources globally that jeopardize their business future and society at large.
However, industry impacts on global water systems do not have to be a net negative. The private sector and investors are positioned to lead the world in adaptation and innovation in response to pressing systemic threats to global water and climate systems. They can go beyond their direct operations and expand their sphere of influence – across their value chains and through collaborations with industry and government – to help solve these systemic challenges.
By focusing and investing in these challenges today, companies can substantially reduce financial risks and bottom- line losses down the road. Drawing on the available body of scientific literature and Ceres’ vision of sustainable business leadership, we offer a practical set of recommendations to help companies respond and get ahead. Many of the recommendations are adapted from the Ceres Roadmap 2030, a 10-year action plan to help companies strategically navigate ever-changing business realities in a warmer, resource-stressed world.
1. Water Quantity
Companies should ensure their practices are not negatively impacting water availability, with particular attention to water scarce basins across their value chains.
To kickstart these efforts, companies should immediately assess water quantity impacts of direct and supplier operations and then set water use reduction targets that are informed by local conditions, prioritizing watersheds with high water stress and high use. They can support these efforts by investing in systems to improve supplier reporting and traceability of water intensive inputs and commodities. They should also directly engage suppliers to identify solutions for reducing water use and provide meaningful incentives to support investments in water efficiency and reuse.
2. Water Quality
Companies should ensure that their activities are not polluting local and regional water bodies.
To kickstart these efforts, they should immediately assess water quality impacts in direct and supplier operations and across product life cycles (where relevant) and use this assessment to inform target-setting and develop short-term priority actions.
They should also evaluate the use of chemicals of concern across operations, products, and material inputs, identifying opportunities to transition to safer chemical alternatives and invest in solutions when safer alternatives are not yet available. They should then set robust targets to reduce pollutant discharges of concern, with an immediate focus on eliminating pollutants of greatest industry concern, such as persistent organic pollutants (PAHs) and heavy metals. They can further support these efforts by aligning new research and development, capital expenditures, and merger and acquisition activity with targets for reducing the discharge of pollutants of concern.
3. Ecosystem Protection
Companies should ensure that natural ecosystems are not degraded from business activities and help restore ecosystems that their businesses depend on.
Companies can start by assessing their operations and value chain practices to analyze critical resource flows based on their dependency and impact on natural resources, ecosystems, and biodiversity – steps that will allow them to identify material issues and prioritize action. Companies should embed circular economy principles as a priority in decision-making across operations, design, sourcing, and supply chain management. Lastly, they should set interim and long-term resource protection targets toward the achievement of resource positivity and ensure all capital expenditures and sourcing decisions do not contribute to conversion of natural ecosystems. Achieving these objectives will require decoupling business growth from the destruction of natural resources and committing to be resource positive in ways that strengthen ecosystems and prioritize resource access for vulnerable communities.
4. Access to Water and Sanitation
Companies should collaborate on efforts to support access to clean water and sanitation in the communities they interact with and impact.
Companies should invest in solutions and multi-stakeholder collaborations that not only benefit the community, but also strengthen local water infrastructure, improve employee and community health, and enhance the social license to operate.
Companies can commence these efforts by adopting a corporate policy with designated financial and human resources that respects the human rights to water and sanitation. They can implement safe water sanitation and hygiene at the workplace and engage in actions to support the same for suppliers. They can reinforce these goals by supporting public policies and investments that promote increased community access to clean water and sanitation.
5. Business Integration
Companies should ensure that water-related risks and opportunities are systematically integrated into corporate governance and decision-making from the boardroom and senior management to employees at all levels of the workforce.
A key first step is to formalize board of director and senior management oversight of water management efforts and integrate these issues into their decision-making on strategy, risks and revenues.
Board directors should be informed on material and salient water priorities for the business so that they can evaluate those priorities in the context of short- and long-term strategic decision-making. Executives should be held accountable for water-related goals and incentivized via clear, transparent, and publicly disclosed compensation packages. Innovation and research and development should be a key focus of water management efforts.
6. Public Policy Engagement and Water Governance
Companies should proactively support public policies and water governance structures that further sustainable water resource management.
They should advocate for international, federal, and local policies that align with the latest environmental science, internationally recognized standards, and opportunities to maximize community well-being and the human right to water.
Companies can initiate these efforts by assessing how policy engagement and lobbying efforts are exacerbating or mitigating water- related risks to the company and its value chain. They should systemize decision-making on water issues across the company, including in all direct and indirect lobbying. They should also be engaging with and advocating for trade associations to align their policies and lobbying activities in support of water-related business priorities and solutions.
7. Multi-Stakeholder Collaboration
Since water is a shared resource, companies should be boosting multi-stakeholder collaborations to ensure sustainable water resources.
They should be building, engaging, and investing in industry and cross-industry efforts that challenge traditional business practices and enable system-level changes that are needed.
By building and scaling collaborations with industry peers, civil society organizations, governments, local communities, and other industry water users, companies can positively influence broader market, regulatory, environmental, and social systems. They should encourage and support pre-competitive engagement as a way to organize diverse stakeholders and drive innovation at industry and cross-industry scale. Research and development- related collaboration to better understand the risks of fast-proliferating water pollutants, such as pharmaceuticals in developed and developing countries, should also be considered.