Why Water is a Rising Tide on the Corporate Agenda

Water scarcity is both an economic and humanitarian crisis that presents extraordinary risks to global supply chains, corporate profits and the well-being of communities and populations around the world.

Climate change, population growth and economic development have all led to increased competition for water resources. As a result, water has become scarcer and costlier, and that trend will continue in the years to come. With a projected 56% global freshwater deficit by 2030, there is urgent pressure on businesses to rethink the way water resources are managed.

I recently spoke at GreenFin 2022, the premier ESG event aligning sustainability and capital markets, where I addressed how corporations and financial institutions can make investments that help drive a water secure future. In our panel, which included leaders from Bank of America, Water.org and the Water Resilience Coalition, we made the case that water scarcity is an issue that many businesses have not yet addressed—but that fact can’t continue. The global water crisis impacts everyone, and businesses and investors need to take action to address it.

Corporate ambitions are disproportionate to the magnitude of the problem

With some exceptions among leading companies, corporate water efforts to date have been largely focused on improving operational water-use efficiency. In many cases, there is limited accounting for the surrounding basin context. As a result, many corporate water targets are not fully aligned with the basins’ specific needs or do not address the root causes of water challenges. This is particularly true at the facility level, where managers often lack the tools and expertise to set local water targets that can deliver on meaningful corporate water ambitions.

To reduce the risks posed by water scarcity and sustain global business growth, companies need to take steps now to reduce or eliminate shared water challenges and protect social well-being. The benefits of immediate action? Enhanced operational resilience and increased opportunities for growth and profitability in the years to come.

The good news is there are tools to help businesses make an impact, including a publicly available free Smart Water Navigator tool to guide companies on their smart water journeys, a global water risk mapping tool from the World Resources Institute, a water risk filter tool from the World Wildlife Fund and a water stewardship toolbox from the UN CEO Water Mandate, to name a few.

?Bigger, bolder steps are needed

?Addressing these challenges on a global level will not be easy. It will take innovation, collaboration and investment capital to solve the escalating crisis. Starbucks is a great example. Starbucks has adopted a host of initiatives to become a resource positive company. The company plans to cut its carbon, water and waste footprints by half by 2030. And by 2030, Ecolab, too, has plans to achieve a net-water positive water impact and reduce greenhouse gas emissions by 50%.

In addition to addressing water scarcity in their own operations, corporations can maximize their impact by joining forces to address the global water crisis. The Water Resilience Coalition is a prime example. It is a CEO-led movement aimed at addressing the global water challenge collectively through ambitious, accelerated actions. Ecolab is a founding member and Starbucks is one of 30 companies in the coalition. One of the Coalition’s core commitments is to deliver a net positive water impact in high-risk water basins to help more than 3 billion people in water-stressed regions of the world.

?The Water Resilience Coalition’s 2030 goals include: ?

• Expanding to 150 companies from 30 today
• Prioritizing 100 of the world’s high-risk water basins
• Working collectively to pursue interventions around drinking water access, sanitation and hygiene, or WASH, that will impact 300 million people

?Philanthropy alone is insufficient to address the scope of the problem

?One of the main reasons why we need initiatives like this is that philanthropy alone can’t solve the global water crisis. For years, we’ve relied on charitable efforts to fund projects to address freshwater availability, accessibility and quality. But the problem is too large for philanthropy alone. That’s why a number of corporations have adopted a new and bolder approach: banding together to invest in water equity impact funds. These companies want to play an increasingly material role in the innovation, collaboration and delivery of investment capital needed to solve the escalating crisis.

Like traditional investment funds, water equity funds enable companies to invest capital and earn interest income. But there is a major difference. Water equity funds leverage the power of the markets to support a great cause: micro-financing of water-related projects for vulnerable communities. This approach elevates philanthropy efforts and magnifies the impact by involving the private sector.

WaterEquity is a prime example. It is an asset manager with an exclusive focus on ending the global water and climate crisis. WaterEquity emerged out of Water.org, an NGO founded by Matt Damon and Gary White that helps distribute small loans to install faucets and toilets in their homes. WaterEquity invests in financial institutions and enterprises in emerging markets delivering access to safe water and sanitation to low-income consumers. It provides opportunities for investors to make responsible and sustainable investment choices that will reduce the impacts of climate change and gender inequality. while offering an attractive risk-to-return profile to investors.

When it comes to tackling an issue as critical to people, planet and business health as water scarcity, we simply can’t rely on the solutions of the past. And we can’t go it alone. We need to think big, work collectively and act now. Increased corporate water investments aren’t the only solution to the global water crisis, but they are an important new strategy for driving meaningful action toward a water-positive future.