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Our Insights 19 Dec 2017

What Corporations are Missing about Water Goals

By Corinne Hanson

Photo by Linus Nylund on Unsplash

This is part 2 of a 6-part series revealing findings from SustainAbility’s recent report, “Targeting Value,” which focuses on how to maximize impact through corporate sustainability goal setting. Part 3 will discuss what happens when a company fails a sustainability goal.

The identification of water as a major risk to business is far from new, but 2016 and 2017 brought accelerated adoption of the kind of water management strategies and goals most needed. Given the severity of water risks globally, corporate water goals are an essential component of high-impact sustainability goal-setting, as discussed in SustainAbility’s recent report, “Targeting Value.”

CDP’s annual water management index and report, “Thirsty Business: Why water is vital to climate action (PDF),” show that in the last two years, corporate efforts to improve water management practices have surged, but there remains significant room for improvement and wider adoption of water management strategies and goals. A growing number of companies are engaging in goal-setting to some degree.

For example, 54 percent of CDP respondents have set goals (both quantifiable objectives and qualitative aims) to better manage water resources. However, room for improvement is evidenced by the fact that in 2016, more than half (677) of the companies asked to disclose water data by CDP failed to do so (although they may have reported via other channels).

Our assessment of water goals across the food, energy and finance sectors reflects similar trends: The vast majority of goals are quantitative, absolute goals while some are more qualitative in nature. We also discovered that the food sector was more likely to have water-related goals than companies in energy and finance, although these three sectors are critical to addressing water challenges (food and energy for their significant impacts on water withdrawals and finance for the deficit still needed to fund global projects). This finding was consistent with CDP’s, in that only 29 percent of energy companies that were requested to disclose water-related information by their investors did so for 2017 via CDP.

Best practices

Water goals are still relatively nascent, and therefore, even the most sophisticated water goals fall along a spectrum of internally to regionally focused. Water goals and targets are also somewhat unique in that addressing and minimizing a company’s explicit water footprint is a critical first step that can be incredibly complicated depending on a company’s supply chain or infrastructure.

The most sophisticated programs extend far beyond a company’s direct water usage, and leveraging context-based goals is increasingly essential to meeting the needs of each basin or watershed.

Therefore, best practices still exist in the form of efficiency. However, the most sophisticated programs extend far beyond a company’s direct water usage, and leveraging context-based goals is increasingly essential to meeting the needs of each basin or watershed.

Operational efficiency goals

Both CDP and SustainAbility’s review find that quantitative operational efficiency goals are among the most common, unsurprising given that companies have the greatest control over their own operations and greatest comfort with goals in this area. For example, CDP highlights Consol Energy’s use of quantitative goal-setting in committing to recycle or reuse at least 90 percent of its process water in its core operating areas, a target it met for the period 2013 to 2015. This is a critical first step in addressing overall water withdrawal rates and reducing inefficient water usage practices.

Water basin sustainability

Addressing water risk demands that companies consider how to secure and maintain the water basins (or broader watersheds) in which they operate, and means looking further upstream in their supply chains to address the full scale of impact.

Here, qualitative targets can be a necessary step. For example, Dell disclosed a goal in 2014 to require all production sites and certain service suppliers to have water risk mitigation plans in place by 2020. It also set a goal of using CDP data and Dell’s own hot-spot mapping to identify the company’s 50 suppliers with the highest water usage or risk of water-related natural disaster. By the end of the 2016 financial year, all 50 had published five-year water risk mitigation plans.

Context-based water goals

A collaboration between several of the world’s leading water experts is promoting a more rigorous context-based approach to setting water targets. CDP, the U.N. Global Compact CEO Water Mandate, the Nature Conservancy, World Resources Institute and World Wildlife Fund are calling for a new approach to setting corporate water targets reliant on local context and informed by the best available science.

This approach is intended to help eliminate bias from decision-making and prioritization, while improving reliance on common language and key performance indicators (KPIs) to support measurement and track progress of goal impacts. The collaboration partners also note that context-based water goals necessitate dialogue with stakeholders specific to each water basin and rely on rigorous analysis of risks across all relevant regions and components of a company’s value chain.

The companies pursuing water risk assessments raise the bar for leadership on corporate water stewardship.

What’s next?

Although water-risk assessments have become more commonly available, we are only just beginning to see them robustly applied to goal-setting. The companies pursuing this raise the bar for leadership on corporate water stewardship and are expected to lead more impact-focused conversations around setting and achieving water goals.

Going forward, we also expect to see stakeholder engagement become increasingly vital to achieving the next tier of progress on water sustainability. A few reasons:

  • One strength of context-based water goals is that they encourage all stakeholders sharing water resources in a basin to think about the long-term sustainability of available water resources. However, developing and achieving context-based water goals necessitates a wider dialogue among stakeholders (PDF), more so than setting either absolute or relative in-house goals would, and such goals are therefore likely to take longer to set and implement.
  • As water resources become scarce, competition for water will increase, and it will become even more critical to carry out stakeholder engagement to ensure companies set water goals that align with equitable and responsible withdrawals and watershed management.
  • Data collection will be essential to providing appropriate context, and companies will need cross-sector collaboration and public-private partnerships to collect said data and ensure that all stakeholders have a complete picture of a watershed’s long-term health.

Not only do we hope to see a greater number of companies setting corporate water goals, we hope to see companies continuing to move beyond internally focused water goals alone and into the space of context-based and true systems thinking around water issues.

This article originally ran on GreenBiz.

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