Why businesses must act together to alleviate the global water crisis

By 2030, the UN predicts that demand for water will outstrip supply by 40 percent. Freshwater is increasingly scarce in drought-prone regions due to climate change, population growth and over-exploitation. More than two billion people lack access to safe water and sanitation, placing the UN social development goal of universal access by 2030 almost beyond reach.

Water is a shared resource, but with climate change intensifying water shortages, the stage is set for conflict over who gets access to this vital asset. Companies are the world’s largest water users, with nearly two-thirds of all freshwater resources going into the production of ingredients for corporate supply chains, from food to chemicals. In times of scarcity, governments will always prioritize human consumption and food bowls first. Organizations are discovering this to their cost, as lawsuits and injunctions attest.

The competition for scarce water resources is not a battle the corporate world can resolve by working alone. To stay in business, maintain good relations with local communities and protect their license to operate, it makes much more sense for businesses to join forces to preserve water resources and protect basins that are at risk.

Many individual companies are undertaking efforts to save water, save money and help build good community relations with other users. But individual initiatives are not enough. We need concerted, collective action to ensure there will be enough water for everyone in the very near future. This is the goal of the Water Resilience Coalition, an industry-driven, CEO-led initiative of the CEO Water Mandate, a partnership between the UN Global Compact and the Pacific Institute.

Companies can secure a legitimate claim to water by becoming wise custodians of what they use and, also critically, by becoming part of the larger solution to the global water crisis. There are many ways in which this can be done.

At an individual level, large industrial users can take immediate steps to reduce water usage in their own operations by recycling and reusing wastewater, plugging leaks, installing more efficient cooling systems, and using inputs and processes that require less of it.

Levi Strauss, for example, now makes jeans by means of a process that uses up to 96 percent less water in denim finishing, saving more than three billion liters so far. Tech giant Microsoft has tested a submarine data center, which dispenses with the need for freshwater for cooling altogether. Multinational food corporation Danone is testing the concept of “zero water factories” in India and Belgium, harvesting rainwater, and treating and reusing wastewater, to close the water loop at production sites. Water stewardship leader Ecolab, meanwhile, is helping organizations adopt smart water management practices with its Water Risk Monetizer and Ecolab Smart Water Navigator online tools.

Businesses joining the Water Resilience Coalition commit to preserving the world’s freshwater resources in three ways. First, they commit to achieving Net Positive Water Impact (NPWI) in water-stressed basins where they operate. NPWI is a framework that guides companies to ensure their contributions exceed their impacts on water stress in the same region. NPWI specifically quantifies action on water availability, water quality, and equitable access to safe water, sanitation and hygiene. Members also commit to support water resilience in their own company supply chains and to raise awareness through public and corporate advocacy.

The Water Resilience Coalition comprises 27 prominent companies—ranging from clothing companies like Gap Inc. to technology companies like Microsoft—together representing $3.5 trillion in market capitalization today, but their ambition is to increase that to 150 companies, with the potential to influence one-third of global water use. They have also set two specific goals for 2030: to have a positive water impact in 100 water-stressed basins, that are home to more than three billion people, and to enable access to safe water and sanitation for more than 300 million people.

Those companies that are getting involved won't be working alone, but with NGOs, local communities, government agencies and each other. Collective action is the key to achieving the common goal of water security.

The coalition is already engaged in 12 co-funded collective action water projects in 11 identified basins located in Indonesia, India, South Africa, Brazil, Mexico and the United States. During 2022, work will expand to 15 priority basins that support 770 million people living in water stress.

With urgent action, the world’s water crisis can be alleviated. The private sector has a vested interest in ensuring that water resources are managed responsibly, fairly and sustainably. Businesses have a choice: they can do nothing, and face climate-related water risks intensifying by the day, as well as the regulatory, operational and reputational risks that will accrue with careless consumption; or they can become trusted water stewards, working both within their own companies and by joining together with other companies and partners toward greater water resilience. The CDP, a not-for-profit organization that runs the global disclosure system for managing environmental impacts, estimates that more than $300 billion of business value is at risk if no action is taken to address water scarcity. Tackling the problem will cost five times less at $55 billion, while the business opportunities of investing in water security are estimated by the CDP at US$711 billion.

Companies can advance water resilience by becoming trusted water stewards, by taking collective action to protect water basins, by engaging in water governance discussions, and by contributing to increased access to water, sanitation and hygiene.

Water is as essential to business as it is to life. Companies can become part of the broader global solution by acting together to protect and restore water basins that are at risk. Every business must learn to become a good water custodian, but only collective action can achieve the accelerated lasting impact we need to solve the global water crisis.