If you're seeking the green holy grail called sustainability, you'd better be sure it's filled with water. Many companies are hyper focused on carbon footprinting, green buildings, and energy saving treasure hunts; however, the sustainability landscape is evolving, and these green issues will become table stakes. A new, blue dimension of sustainability -- one that affects capital costs, consumer values, and environmental integrity -- is on the horizon and rapidly approaching: water.
Two key factors are going to change the way water is managed inside companies: 1) water availability will change as a result of climate change, and 2) water scarcity will become more widespread as world population continues to grow.
These factors will directly impact the availability of water, thereby influencing its cost and the cost of business operations. Water prices rose 27% between 2001 and 2006 and are forecasted to continue to increase, according to the NUS Consulting Group. To compound these issues, some say that population growth will cause water quality to decline from increases in waste and non-point pollution.
Companies are beginning to realize that water, like energy and carbon, should be a key pillar of a corporate sustainability strategy. Both PepsiCo and General Electric have made commitments to reduce water consumption 20% by 2015 and 2012, respectively. Weyerhaeuser, an $8.8B company in the lumber and wood production industry, set a goal to reduce water at its cellulose fibers mills 20% by 2012.
Despite these impressive commitments, few companies are managing water as a strategic resource. More often than not, companies are dealing with water-related issues in a scattershot fashion by focusing on risks associated with water withdrawal, use, and disposal.
Some of the biggest water-related risks companies face are:
- Operational: Changes in water availability or costs could disrupt business operations
- Regulatory: New regulations or lawsuits associated with water use could add to capital costs or restrict operations
- Reputational: Failing to address social concerns associated with water use could prove damaging to a company's reputation or brand
Developing safeguards for these types of risks can help companies stay off the radar of watchdogs, but they will not offer competitive edge in the market place.
Corporations need to look beyond risk-management when developing sustainability strategies. A successful approach should include defensive (risk-management) provisions as well as offensive strategies that foster growth (innovation and conservation).
Growth Through Competitive Advantage
In order to gain a competitive edge, companies can focus on process and product innovations that deliver cost savings to the company and the consumer through the more efficient use of water. There are three main ways a business can achieve this goal: implementing process efficiency measures, redesigning existing products, and developing new products that enhance environmental performance.
Operational Efficiency: Innovations that reduce water use through elimination, reduction and recycling offer benefits in terms of cost savings, by reducing water, energy, treatment and disposal costs; environmental impact, by reducing pressure on local water supplies; and reputation, by promoting an image as a responsible community member.
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