Human emissions of greenhouse gasses are the primary driver of climate change. Against this backdrop, it’s no surprise that commitments to carbon neutrality and lowering GHG emissions have come to dominate sustainability discussion.
Unfortunately, however, decarbonization alone will not mitigate climate change – or the risks that your business faces as a consequence. And while there are many environmental impacts to consider when building your ESG Strategy, one area in particular is often overlooked: water.
Today, the water crisis is already widespread and projected to worsen, which means it should be part of all corporate ESG reporting initiatives, not least because water risk can have a huge impact on your business.
Our blog on developing an effective ESG strategy explains in detail how to work out which issues are material to your organization, as well as how to set targets for change, but in the mean time, here are 3 compelling reasons why you should be paying attention to water stewardship right now.
1. the water crisis is critical
From devastating floods to megadrought and contamination, there is a lot be to be worried about when we consider our water future – both from a business perspective and as global citizens.
People are losing their lives, homes, and livelihoods. A staggering 2.4 billion people live in water-stressed countries, with most countries (129!) not on track to meet UN Sustainable Development Goal 6: establishing sustainably managed water resources by 2030. They will need to double recent progress to make this goal a reality.
At an organizational level, although some companies have started addressing water reduction, only 4.4% are reporting progress against water pollution reduction targets.
That’s worrying because, although tracking consumption is important, collectively we need to embrace a more comprehensive approach to water stewardship in order to address the problem. It’s the only way to truly protect such a vital resource and there is still a lot of work to be done.
2. there are real business risks
As the water crisis deepens, the risks to your business multiply. In 2022, the CDP estimated that the financial impact of water risks, such as shortages or pollution, was $392 billion. That’s far greater than the amount needed to mitigate water risk, which in 2020 was estimated at $55 billion.
Even more surprising, research shows the potential financial impact from water risk is likely to be three times higher than from carbon risk. Despite this fact, carbon continues to receive more ESG attention than water when in fact, companies from all sectors need to think carefully about the cost and availability of water as a key resource.
In contrast, addressing water risk can save money and contribute to the bottom line. The CDP’s 2020 Global Water Report estimated business opportunities related to water security at $711 billion.
Responsible ESG water management has a lot to offer, but if you’re unsure what corporate water stewardship means for your business, or how your organization could benefit, check out our blog: Why Invest in Water Stewardship?
Still need convincing? Ask your investors.
3. investors are demanding action
Overwhelmingly governments remain behind on necessary regulation incentivizing organizations to be good water stewards, especially in the US. While there are some signs of impending change with contaminant protections, there is generally more of a focus on penalty than proactive protection.
That needs to change, of course, but the material risk is waking up other stakeholders — specifically investors. More and more investor coalitions and networks representing trillions of dollars in assets are pressuring companies, and indeed whole industries, to start taking action on water.
Considering the potential devastating costs of water risk, investor demands for transparency and action are only expected to increase and become the norm, even if governments lag behind.
take control of your water impact
Sustainability is key to the future of your business. That means looking beyond the current emphasis on carbon (necessary as that is) to recognize that the water crisis is something all businesses need to address – not least by incorporating water as a fundamental part of your ESG strategy.
Need help managing your water impact? The AMCS Sustainability Platform tracks, measures, and manages water risks and impacts across your organization. Helping future-focused organizations protect this critical natural resource and take full control of their water footprint.