Companies Ignore Water Scarcity, Climate Risk

New Report Says Companies Must Take Greater Role in Assessing Water

Mar 4, 2009 Louise Harris

Although climate change is contributing to water scarcity worldwide, businesses are ignoring the risks associated with a lack of water, a report found.

An adequate supply of clean water is crucial for every industry, said Mindy Luber, president of Ceres, an organization of investors, environmental groups and other public interest groups working with companies to address sustainability issues, during a Feb. 26, 2009, press conference regarding the report published February 2009. Water is a must for a healthy economy and for business growth, she said. Not paying attention to the risks could be disastrous in the coming years. Water Scarcity and Climate Change: Growing Risks for Businesses and Investors was written by Jason Morrison, Mari Morikawa, Michael Murphy and Peter Schulte.

“Ignoring risks in business is never a good thing. People had known about the subprime risks but didn’t do anything about it. Now we are all suffering,” Luber said.

According to the report, decreasing availability, declining quality and growing demand for water are creating challenges to businesses and investors who have taken clean and inexpensive water for granted. Companies can no longer take water for granted, said Peter Gleick, president of the Pacific Institute, which published Water Scarcity and Climate Change: Growing Risks for Businesses and Investors.

Electrical Power and Agriculture to Suffer

This report highlighted the intensifying conflict between energy use and water availability. It expanded on previous reports on managing resources to include climate change. From the research, Gleick explained, the industries most-immediately affected include agriculture, beverage, high-tech companies, electric power and energy production, apparel, biotechnology and pharmaceutical, forest products, and metals and mining sectors. Climate change will reduce the availability of reliable and high-quality water, impacting productivity, costs, revenues and public reputation.

Water-related risks can hurt companies by causing problems for their suppliers, Gleick said. For example, the drought in California is forcing a reduction of water used for irrigation. That could lead to a shortage of supplies for grocery stories nationwide. It could also make farm equipment not necessary, which would hurt the equipment manufacturers.

Gleick recommended that companies take action now to analyze the impacts of declining water resources have on the entire supply chain.

  1. Measure the company’s water footprint
  2. Assess physical and regulatory risks linked to its water footprint aligned with its energy and climate risk assessments
  3. Integrate water issues into strategic business planning
  4. Talk with stakeholders
  5. Disclose and communicate water performance and risks

Investors should

  1. Independently assess companies’ water risk exposure
  2. Demand more meaningful corporate water exposure
  3. Encourage companies to incorporate water issues into their climate change strategies
  4. Emphasize business opportunity side of the water challenge

A strategic plan that includes water risks would help companies save money in the long run and help them during this troubled times, he said.

“The bad economy should not be used as an argument for not doing water risk analyses but an argument to do them more quickly,” Gleick said during the press conference.

The copyright of the article Companies Ignore Water Scarcity, Climate Risk in Meteorology & Climatology is owned by Louise Harris. Permission to republish Companies Ignore Water Scarcity, Climate Risk in print or online must be granted by the author in writing.
A Lack of Water is Growing Worldwide, Ceres A Lack of Water is Growing Worldwide