The Sustainability Buzz

Emerging Sustainability Metrics – Water Footprinting

Water FootprintingWe all know that water is one of the fundamental requirements for life, but increasingly, industry is realizing that water is also one of the fundamental requirements for staying in business. According to a report by the 2030 Water Resources Group, global water requirements in 20 years will be “a full 40% above the current accessible, reliable supply.” We’re already starting to see the impacts of unsustainable water usage patterns with recurring water shortages in places like the Southeast and Southwest and battles over rights to underground aquifers throughout the country.

Consider the impact that the 2001 drought in the Pacific Northwest had on Anheuser-Busch, the world’s largest beer manufacturer. It seems like common sense that a beer producer would be affected by drought since beer is 90% water. Less intuitive, however, is the fact that the real impact of drought on Anheuser-Busch was not realized in the scarcity of water needed for brewing, but rather the water needed to produce key ingredients for brewing and related commodities. Because irrigation had been curtailed in Idaho, barley was scarce, and the cost of manufacturing aluminum for cans rose because less water meant less cheap hydroelectric energy.

Again, it seems like common sense that a company in the beverage industry would be most at risk with water shortages. However, according to Will Sarni, Director and Practice Leader of Enterprise Water Strategy at Deloitte Consulting, “The need for water cuts across all sectors; every company needs water.” To illustrate that point, it takes a whopping twelve gallons of water to produce one computer chip.

Additionally, investors are unhappy with the fiduciary risk they see resulting from increased strain on the water supply. The Carbon Disclosure Project recently launched a global Water Disclosure Project with the goal of helping investors factor water risk into their investment strategies, which should help force companies to focus on ways to mitigate that risk. A recent study by Ceres, the organization that launched the Global Reporting Initiative, found that “only six companies report any water accounting data within their financial filings.”

Sarni also reports that a majority of Americans believe that business must play a key role in addressing these water issues. So how do companies take the first step in assessing water risks and developing a conservation plan? That’s where the concept of water footprinting comes into play. And like we always preach here at iSpring, if you can’t measure it, you can’t manage it.

The nascent field of water footprinting is still being clarified and standardized, but businesses have started using it as a way to uncover water-related risks and cost-saving opportunities. Companies like Levi Strauss and SABMiller have embraced this tool and have conducted their own water footprint studies. These studies give us insight into the key aspects of water footprinting, as well as provide a framework for how other companies might go about doing the same thing. Four main considerations have emerged thus far to adequately assess an organization’s water footprint.

  1. Examine the entire supply chain. It is important to look beyond the operational uses of water. Remember the Anheuser-Busch example: their biggest water-related risks were associated with the production of key ingredients and packaging.
  2. Look locally. Unlike carbon footprints, which don’t vary much with respect to geography, water footprints can vary drastically from region to region. For example, a company’s water footprint in Saudi Arabia is going to be very different from its footprint in Michigan, and this has nothing to do with operational efficiency.
  3. Consider the timeframe. It is critical to be clear about the timeframe in which the study is completed. For instance, a crop-related product’s water footprint may vary substantially from a rainy season to a dry season.
  4. The “color” of water matters. It’s important to consider the different kinds of water—green, blue, and grey—that a company uses and/or produces. Green water refers to water “embedded” in plants involved in any part of the supply chain. Blue water represents fresh surface or groundwater used in production. Grey water is unconsumed green or blue water that is unavailable for potable uses because it has been polluted.

Although the concept of water footprinting was introduced as early as 2002, it has become clear that best practices and standards need to be developed around the process. The good news is that several heavy-hitters, such as the Carbon Disclosure Project, the Alliance for Water Stewardship and the WRI Aqueduct Project, are all working on the issue.

And with the impending water crisis, this important work comes none too soon. Water footprinting may be in its early stages, but it won’t be long until water footprinting becomes as common a sustainability metric as carbon footprinting is today. Is your company prepared?

Source: Valuing Water: How Can Businesses Manage the Coming Scarcity? Initiative for Global Environmental Leadership and The Wharton School of Business. March 2011. Get the full report here.

© 2008-2018 iSpring Associates - Site designed, built and maintained by iSpring Associates.