Co-operation between businesses, water companies and the government will be “key” to managing and securing future water supplies, according to a new report.
The report – Sink or Swim – from the Cambridge Institute for Sustainability Leadership (CISL), is the result of a collaboration between nine companies across six sectors. It examines new strategies to manage the “economically strategic resource” that underpins many business activities.
A growing population and the impacts of climate change are leading to water becoming scarce, particularly in poorer countries, and increasing the risk of flooding in other areas. As a result, the report calls for stakeholders to work together to ensure water security.
Peter Simpson, chief executive of Anglian Water, said, “Ensuring that water is carefully stewarded and available in sufficient quantity and quality is a vital component of business success. Water scarcity can damage productivity, disrupt supply chains, put water users in competition with each other, and ultimately harm corporate trust and reputation.
“These risks impact sectors in many different ways, but collaboration and innovation are absolutely key to achieving resilience and to protecting the economy.”
The report sets out four financial models, ranging from water company-led approaches to a model that is funded by private sector initiatives, in a bid to challenge the current single sector approach and encourage more stakeholders to become involved and invest in solutions.
Johann Clere, global director of business development at French firm Veolia Water Technologies, described the collaboration of different multi-stakeholders as “important”. However, he noted that it is actually a quite complex process and there are more straightforward partnerships for shared value creation.
Clere added, “Everyone talks about water abstracted like it can just be used once but wastewater can be treated and then reused.”
Today, Clere explained, more and more industries are upgrading their wastewater treatment plants, either to reuse it in their process or to sell it to third parties and create new a revenue stream, “transforming waste into a resource”.
A new trend to ensure water security and avoid conflicts with local people and farmers has seen companies, especially from the extractives sectors, co-financing the upgrade of municipal wastewater treatment plants for industrial reuse purposes.
For example, Veolia recently worked with a leading phosphate mining company in Morocco that was dealing with challenges around water and this model provided a shared value opportunity for local stakeholders. However, in order to scale this there is a need to monetise risk and demonstrate to decision makers the true payback, Clere added.
The CISL report also noted that an increasing number of companies are recognising the material consequence water scarcity can have.
“For example, the insurance industry has shown a clear interest in reducing the costs of flooding; whilst farmers, food producers, water companies and energy companies are only too aware of the importance of managing water to avoid scarcity”, its report states.
Clere added, “You can look at risk mitigation while also assessing new financial opportunities and I believe that if you are able to demonstrate that you are more resilient, that you have a good strategy to mitigate some of the risk, you might be able to improve your insurance premium and financial ratings.”
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