Industry Trends

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A precious, finite resource - vital for the continued survival of the human race.

Exchanges among shady businessmen and questionable back-door deals leave the resource in the ownership and power of one man, who then uses this power to blackmail and bribe his way to further power.

If you think this sounds like the plot to a James Bond movie, you’d be right. The Quantum of Solace film from 2008 may take artistic license with the outcomes of such an event, but there’s no doubting the dangers facing the global population when it comes to water in 2019.

Globally, 1.2 billion people lack access to clean drinking water and water scarcity impacts 2.8 billion people for at least one month each year.

Scarcity is so bad that cities like Cape Town, South Africa have come close to running out altogether, putting drastic water-saving measures in place to maintain long-term supplies. But even with these precautions, the city could run out of fresh water within the year.

The U.N. has projected a global freshwater shortfall by 2030 if nothing changes, and the World Economic Forum has listed water scarcity as one of its global systemic risks of highest concern.

Water scarcity can be defined in two ways – either physical, inadequate supply to meet demand, or economic, resulting from the poor management of available water resources. According to the U.N. Development Programme, the poor management of resources is more often found to be the cause of scarcity in countries or regions; the water is there, but a lack of resources or infrastructure prevents it from being provided where it’s required.

Unlike our example from Quantum of Solace, the role of leaders and those in power is not to hoard water or reduce its accessibility but to ensure that resources are used correctly and fairly. This is where businesses come in, though there is plenty of work to be done before their impact will be felt in a positive way.

Why Businesses Need to Take Water Management Risks Seriously

A recent survey highlighted that although 74% of companies say water usage is an increasing priority and 59% note it to be a growing business risk, 44% of the respondents said they had no plans in place to achieve strategies relating to water management.

This is a major problem, as water is just as vital a resource for an organization as for the people working there. Water is used across all industries, from producing crops (cotton and avocado are two of the most water-intensive products to grow) and producing energy, to cooling power plants and data centers for IT services.

There is an economic argument for organizations to do their part to aid water conservation efforts. In developing countries alone, a four-fold return has been calculated on annual investments in improving water resource management. Sasol, a South African-based energy and chemical company, is one such example. The company invested in repairing water leaks in the Emfuleni municipality to support local water security, but as a by-product reduced its own water management costs too.

Businesses can make their investments in a number of ways – backing start-ups developing new technologies; metering management and smart meters; water recycling initiatives; and initiatives that reduce business risk by using less water or reducing wastage.

In many cases, these initiatives will either pay back via reduced costs on water supply or energy consumption or via a lower regulatory burden on taxes or even fines. Research has also shown that companies that invest more in water resource management outperform their peers through better financial performance and better market value being attached by investors.

Image Credit: Vanatchanan

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