MALAYSIANS who take water for granted are reminded once again during this current hot and dry season of the need to conserve and not to take this precious resource for granted. Water as a resource has been one of the main drivers behind the rapid industry development and good standard of living. Water consumption is expected to double every two decades but rising affluence and wealth accumulation mean that people are now using on average six times more water than a century ago.
The most popular approaches to water issues include measures for greater efficiency, recycling and reuse, and employee education. – Reuters
Water sustainability is anything but clear. In a rapidly changing world, there are now challenges of conserving what we have and overcoming the problems of water too contaminated to consume. Although the planet’s surface is covered with water, less than 1.5% is freshwater which is safe for human consumption.
The Stockholm International Water Institute predicted by 2075, the number of people with chronic water shortages is estimated to be between 3 billion and 7 billion. The United Nations sees this as “one of the largest public health issues of our time.”
Business risks
Virtually every industrial activity requires water. The likes of manufacturing, power generation, food processing, agriculture, paper and drinks sectors are particularly water intensive. That’s why water issues are of serious concerns to business. One immediate action is to determine the material water impacts and how they can be better managed. One of the tools, Global Water Tool, released by the World Business Council for Sustainable Development, is to help companies map out the use the water for their businesses – also to assess risks relative to their supply chains.
A recent ACCA discussion paper on Water: The Next Carbon highlighted that companies, as major users of water, could play a key role in promoting better water management. Several business risks related to water were also highlighted in the paper. First there is the physical risk arising through flooding, pollution, and droughts in regions where business operates. All businesses would be affected by the increased operating costs resulting from diminishing water supplies.
Companies would also see their capital expenditure rise as they are forced to find expensive new ways of treating and extracting water. Such financial risks are not healthy to the competitiveness of the industry. There is also the regulatory risk – where licensing or privatisation of water can possibly affect the quality of water resources, and costs being passed on to consumers.
The probability of reputation damage presents reputation risk for the company. As access to water decreases, people will be looking for “scagegoats” – as evidenced whenever the supply of water resource is temporarily halted. Companies which manage the operations and supply chains of the water resources will put their reputation at risks whenever, frequency of consumer complaints of poor delivery and services increases.
In the food and drink companies for example, wherever there is a limit on water supply, the immediate impact on prices is quite imminent. Business responses Agriculture, drinks and food processing are most vulnerable to water shortages. The threat of water scarcity makes the credit crunch relatively lightweight! Once companies have a hold on their overall water use, the next phase is obviously to reduce it. The most popular approaches include measures for greater efficiency, recycling and reuse, and employee education.
SABMiller, the global brewery company, has identified water as one of its three “opportunities”’ for global leadership. Its “5R” model of water responsibility includes changing attitudes and behaviours towards reducing water consumption across its business operations; reusing waste waters within facilities; recycling using new technologies within the plant; redistributing clean water to the community it operates; and influencing farmers to be more responsible on water use.
Swiss food giant Nestle has a more comprehensive policy towards water consumption. As part of its environment strategy the company is committed to continue reducing the amount of water used per kilogramme of food and drink produced, assuring its activities within its supply chain, respect water resources – both conserving and recycling. Even Intel reclaims more than 3 billion gallons of water a year by collecting and recycling wastewater, solid waste and chemical waste.
Water consumption is high in IT manufacturing plants – clean water is a must for production. Indeed water availability is the lifeblood to business – and therefore critical. Water strategy as part of sustainable solutions is to apply water conservation and demand management measures.
This involves better management of water productivity and quality including working towards a zero effluent discharge.
There is also a need to engage with government and other stakeholders on public policy of water – the extent to how water use should be regulated, monitored and managed. It is important to recognise that water footprint once exceeds its capacity – it would be an almost impossible task to reverse. As big consumers, businesses must share this responsibility more seriously as fundamentally it is a resource we can’t do without.
·The writer is ACCA director, Asean & Australasia. The full report ‘Water, the next carbon?’ is available at: http://www.accaglobal.com/documents/WaterFootprinting.pdf
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