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“Water is seen to be the biggest societal and economic risk for the next 10 years”
Sustainability Outlook spoke to Mr. Joppe Cramwinckel, Director-Water, World Business Council for Sustainable Development on the sidelines of the launch of the India Water Tool 2.0.
What are the risks associated with water in India, particularly for the industry?
In India, freshwater is not always available at the place and time needed by people, companies and ecosystems. This means water constraints present a significant risk for businesses, across a range of areas:
- Financial risks: companies who don’t have sound programs to assess and manage their water impacts can face restricted access to capital, higher loan rates and insurance premiums.
- Operational risks: production costs can escalate due to decreasing availability, quality, and reliability (droughts and floods) of the water supply.
- Market risks: as customers and clients become increasingly concerned about their environmental impacts, companies risk losing market share to competitors that offer products with a lower footprint.
- Reputational risks: public disputes, where corporate water use competes with local community needs, can threat the company’s license to operate.
- Regulatory risks: businesses risk new fees, regulations and lawsuits, where their water use is seen to be in conflict with the public interest.
Often, the biggest risks, impacts and water dependencies aren’t part of a company’s own operations – they’re part of its value chain, for example across suppliers and producers. So addressing this water use often requires action that is outside the company’s direct control.
Over the next 20 years, internal action won’t be enough to cost effectively mitigate the risks of supply scarcity in some regions. Leading companies are increasingly collaborating within a watershed, based on the understanding that water is a shared resource, has finite volumes, and results in collective risk.
Not recognizing and acting on these water risks can impact a business significantly, as the World Economic Forum global risk report indicates.
Is water being acknowledged by industry as a business risk today?
For four years, the World Economic Forum’s (WEF) Global Risk Reports have identified water as one of the three most important challenges worldwide. This year, it has moved to the top. Water is seen to be the biggest societal and economic risk for the next 10 years. This is based on the 2015 edition of the Global Risks report, which draws on the perspectives of experts and global decision-makers, including many business leaders.
The risk doesn’t necessarily differ between large, medium and small companies, but larger companies are in a better position to convert their risk into opportunities.
Who do you expect would be the key users of the India Water Tool (IWT 2.0)? How will using such a tool benefit them?
Water is a collective issue and users aggregate at a regional/watershed level. An adoption of the tool at the community/watershed level will help make collective interventions to improve the health of watersheds. Businesses in India will be the key users of the tool. It is the first step for companies to measure and map water risks across their Indian sites and supply chains. It allows for the first level of screening of sites, based on available datasets and stress indicators. After this screening, users can prioritise individual locations for further analysis and plan for site-specific water management improvements.
For governments and other users, the tool can be an easy way to access comprehensive Indian water data. Investors can use the tool for screening new sites to support their investment decisions.
Stakeholders in India see clear value from the tool in terms of measuring risks and planning interventions at their sites and across supply chains.
We have been invited by the Central Groundwater Board to participate in the development of groundwater management plans in the country. We see this as an opportunity for a much broader use of the tool across the country, in shaping groundwater management plans in collaboration with government and business users.
Are Indian companies willing to invest in sustainable water management?
The willingness to invest beyond what is required to comply with the regulatory environment depends on the level of business risks identified. Given that water is seen globally to be the biggest societal and economic risk for the next 10 years, we see Indian companies increasingly willing to invest in sustainable water management.
One of the challenges faced by India’s companies is accessing good and reliable data on their water challenges. The Indian Water Tool is addressing this issue.
How is IWT 2.0 different from version 1? Are there any plans for further improvement of the tool?
Version 2 brings together data on surface water, rainfall, and water stress indicators in addition to updates on the groundwater datasets contained in version 1. IWT 2.0 is a GIS-platform, which is an improvement on the Excel-based version 1. It allows users to analyse their sites with regard to a wider range of indicators across water quantity and quality, and allows reporting against a wider range of corporate disclosure initiatives.
Recommendations to improve version 2 follow from the launch event held on 27 February in New Delhi. There are plans to include regular data updates as a feature to the tool, and inclusion of data on newer aspects such as biodiversity, natural infrastructure, sanitation etc. There was interest in making the tool focused on specific sectors including agriculture. In the long term, advancements to the tool are seen in terms of its transition from measuring risks to identifying opportunities to improve water sustainability in India.