By MATTHEW BRODSKY, senior editor/Web editor of Risk & Insurance®
Water scarcity is confronting U.S. businesses whether they know it yet or not. The good news is that some companies seem to be recognizing the issue, and are even taking action on it. That's a noticeable difference, even compared with just a few years ago.
"That's a really nice change that's taken place in the last few years," said Linda Hwang, manager of environmental research and development at Business for Social Responsibility.
The number of companies is growing that are learning to understand their water exposure across all of their locations. These companies are prioritizing the risk these locations face and learning how and why water is being used there. They are considering conservation and reuse, studying what the impact of their runoff is.
Still, only a small pack of multinationals have taken the next step: protecting their regional water sources and ecosystems. These firms have come to understand that, no matter how well they handle their water use at certain facilities, they could still be up the creek without the proverbial paddle because the local water is a shared risk. If the local watershed is crippled by weak local governance or poorly coordinated, multifaceted governance, their water supply could be at risk.
So companies like SAB Miller, Unilever, Nestle, Rio Tinto, Coca-Cola and Pepsi have begun to take a "watershed view," as Hwang put it.
For instance, Pepsi is studying the impact it can have on water usage on the commodity level, "on the ground with farmers," Hwang said. Global beer brewer SABMiller has focused on getting more efficiency out of barley and malt production.
Firms are working on sustainability in their agricultural operations. They realize that crop productivity is tied to healthier ecosystems and are focused on what they can do to restore ecosystem function that supports both agricultural productivity and overall ecosystem health.
"That ties to water obviously because they rely on a lot of water to grow all this food," Hwang said.
As for influencing the politics around local watersheds, that can be tricky. Even in areas with weak governance, companies have to respect the clear lines of responsibility around sharing resources, the consultant said. Multinationals can instead play the role of "convener" of all the stakeholders and can help them to collect and share data.
"It is a way to get involved in governance without overstepping the bounds," Hwang said.
May 1, 2011
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