by Will Sarni
Last year we heard a chorus of "water is the new oil," including a memorable BusinessWeek cover depicting oil baron T. Boone Pickens knee-deep in H20. This year the cry is "water is the new carbon" in response to a heightened awareness that resources such as water are more critical and valuable to a company's operation (and brand value) than previously assumed. If you are a water-intensive business such as the food and beverage sector, water is now at the top of your list of sustainability issues to address.
Yes, water is a key business risk that needs to be managed just as energy and carbon are now managed. But in fact, water is not the new oil or the new carbon, and neither comparison is a constructive way to view the value and risk of water within a business context.
Water presents several unique challenges:
According to the Organization of Economic Cooperation and Development, 47 percent of the world's population will face severe water shortages by 2030. This means that multinational corporations now face "water risk" to their operations and brands — even though water is "noise" in a profit and loss statement for most multinationals.
The issue with water is not really one of cost (although this will likely change as we begin to value water according to use and need) but instead has to do with a company's license to operate and its supply chain. While water is a global issue, it is addressed locally in the communities in which companies operate. If a company mis-manages a local water resource and negatively impacts a community, bad press quickly follows. And that, in turn, can create operational interruptions and erode brand value.
Some multinationals have responded by developing guidelines for measuring their water footprint and taking a leadership role in addressing water as a critical global issue (for example, see the CEO Water Mandate at unglobalcompact.org).
Recommendations as to how to address water risks are relatively straightforward and somewhat similar to how multinationals are developing and implementing carbon strategies:
(For a more suggestions, see the Water Footprint Network.)
Thinking proactively about your water footprint — before you are forced to — will create goodwill toward your brand and protect your business from risk.
William Sarni is founder and CEO of DOMANI, and has 30 years of experience in providing sustainability and environmental consulting services to private and public sector enterprises.
This piece originally appeared on Harvard Business Publishing's Leading Green blog.