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Are you protecting your business against emerging water risks?

By Chetan Mistry, Strategy and Marketing Manager – Xylem Africa

Every business relies on water. It requires more than 140,000 litres of water to produce one car (Automotive World) and 2,700 litres to make a single t-shirt (University of Waterloo).

Daily consumption by offices and their employees is as staggering. Office buildings consume almost half of municipal water supply (Stellenbosch Business School) and large office buildings use an average of 75 litres of water per square foot and 50 litres per employee (Commercial Buildings Energy Consumption Survey). This scope also extends to the external: community relations, environmental concerns, and something as simple as customers needing water to remain economically viable.

South Africans are currently experiencing the ongoing impact of electricity undersupply, which gives us a reasonable expectation of what could happen when water supplies fail to meet demand. But unlike energy or practically any other resource input that businesses rely on, there is a tendency to treat water access as reliable and thus without many nuances in monitoring or risk management.

That attitude has to change because the world is changing. Water sources are under growing stress, weather events are becoming more intense, and urbanisation has already changed general water access and consumption patterns. If we consider that without water, every organisation will soon cease or severely curb operations, managing water risks should be a strategic priority.

Types of Water Risks

What are the water risks we should consider? Here are examples:

Are you spending too much on water? Your water consumption might be a significant cost centre, but only tracking general consumption hides nuances problems such as leaks or other wastage, not to mention old pumps and other legacy equipment moving water around.

Are you assuming a regular supply? Water is a human right, and events such as droughts or demographic changes can rapidly constrain how much water a business could access.

Are you contributing to worse water quality? Whether for Environmental Social Governance (ESG) requirements or impact on surrounding communities, if your actions reduce a region’s water quality, you may face backlash and punitive harm.

Are you at risk of water-related damage? Floods, erosion, hail damage and drought can harm infrastructure and supply chains.

Can regulatory changes impact operations? Since water is a public resource, State policies can suddenly and rapidly reduce water access, particularly during droughts.

Is there a reputational risk? Poor water management can hurt your brands or corporate reputation, especially if customers link responsible behaviour to your business.

Are you exposed to climate change or urbanisation? Your risks will grow if you operate in regions at growing risk from extreme weather events or high urbanisation rates.

Addressing water risks

The above are common examples. But water risks are often very specific, relating to a business’s physical region, operations and supply chain. Knowing a business consumes X amount of water daily or weekly is insufficient. Companies must understand their reliance on water down to the specifics.

Fortunately, you only need a small group of actions to address the broad church of water risks:

Do water footprinting: Understand what types of water your business uses. At the highest level, a water footprint looks at your interactions with green (rain), blue (surface/underground), grey (usable but unfit for consumption) and black (contaminated) water. Water footprinting can show how much you rely on external sources and what mitigation options you have, such as recycling greywater or capturing rainwater.

Contextualise water use: Know where your business uses water, such as consumption, cooling, dust management, or as an integral part of processes (cleaning vegetables, mixing chemicals, etc.). This context helps determine the different priorities water represents to your operations.

Track water more directly: A monthly water bill tells you nothing about where exactly all that water is going. Once you have a context for your business usage, measure key areas for a clear view of consumption. This is helpful for several reasons, such as knowing how to prioritise supply in the event of water restrictions.

Do water life cycle assessments: Water flows in and out of your business and connects it to the outside world. Water life cycle assessments are crucial to understanding surrounding environmental and community impact, and will inform ESG and regulatory decisions. You can conduct assessments that include water with other resources—just be sure water is a priority in those assessments.

These four actions can cover most, if not all, of your water risk insights, and there are several ways to tackle each of them. The World Resources Institute and WWF provide tools covering many regional water concerns. More directly, options such as the Water Alternatives Corporate Water Risks Framework and Xylem Water Loss Management can give direct insight into business water usage. Modern analytics using historical data, smart metres and artificial intelligence can bring significant granularity to water strategies.

We mustn’t ignore water-related risks to our companies. The more we rely on water to produce goods and services, the more severe the impact when that water supply runs low. But businesses can prepare and put measures in place. Is your business doing that yet?