Rio is setting targets for water, is your business doing the same?

Blog by Paul McNeillis, Director, 12 June 2012

Water sustainability is one of the major themes at the Rio+20 conference and inevitably part of the debate at this month’s meetings will centre around global targets old and new. Old targets include the Millennium Development Goal to halve, by the year 2015, the proportion of people who are unable to reach or to afford safe drinking water and the proportion of people who do not have access to basic sanitation. A great reminder of the ultimate ‘ground zero’ issue. Progress reports indicate that “the world is likely to exceed its water target” but that 1 in 10 people may still be without water in 2015.  The Rio +20 briefing makes it clear that there is likely to be a broadening of water goals and on the table are a number of additional goals including “the improved efficiency of water uses, overall and/or by sector”. 

This means water sustainability will keep going up the corporate agenda, and companies need to set meaningful targets that help them to measure what matters. But that’s not so easy, because water is a much trickier business than carbon.

In the case of carbon dioxide emissions the answers seemed relatively simple. We all had a single shared reference point in the concentration of atmospheric carbon emissions and a high level of consensus around the reductions in global and industry emissions required to maintain those levels below a critical threshold and global warming to below two degrees by 2050 (now looking more likely to be three degrees at best). Governments set targets on a trajectory of 80% reductions by 2050 and 34% by 2020 and large corporations followed with remarkably similar targets. Commitments to “reduce our carbon emissions by 30% by 2020” became a mantra with a kind of built in approval derived from their macro level logic. These targets also came with an implicit corporate business case as cutting carbon looked attractively like cutting costs to most CFOs.

Switch to water and things look a lot more complex. Companies can appreciate the principle of risks to both their supply chains and their reputations that impacting something as fundamental as water resources might have, so as ever risk has brought water sustainability to the attention of the Board. But beyond that things get complex and messy with respect to strategy, interventions and setting meaningful targets. 

Companies may turn first to the water consumed in their direct office and manufacturing operations and reach for a simple target for reducing these. But this is likely to be a tiny fraction of the indirect usage of water in their supply chain which often accounts for upwards of 90% of total water consumption. So those serious about their water sustainability need to measure their full water footprint including direct and supply chain consumptions. This in itself is much more complex and challenging than gathering the equivalent carbon data, and even scope 3 carbon data is itself proving challenging enough for many to gather. So companies measuring their full water footprint deserve much praise and stakeholder recognition for making a fundamental investment in understanding their specific corporate impacts. But before they can set a reduction target, there’s more to understand.

Companies often use the same logic for setting water targets as for carbon targets, so they seek to express these as reductions in their total water usage. In fact most of this water “used” might actually be returned to its catchment area and provided it is not polluted would not be considered as water consumed (using the Water Footprint Network definition). That’s the good news.

But here’s the challenging part. A company’s water consumption per se should tell you a lot about its processes and where efficiencies and reduction opportunities may lie, but little about its impacts without being set in the context of where and when the water is consumed. So the water data must come with a relationship to origin of consumption so it can be related to maps of water stress specific in time and geography. That makes things more complex. Meanwhile, corporate leaders must be wondering why they are expending such efforts and investments without the easy “cut carbon, cut cost” business case to fall back on.

In a word the answer is insight. Insight into the materials and processes in their supply chains. Insights into the locations and communities ultimately affected by their operations and the delicate balance of the eco-systems around them. Insights into the interventions that might actually make a difference to that context. Insights that can ultimately be turned into more efficient operations, more secure supply chains, more sustainable raw materials strategies, constructive engagement with communities that drive their productivity, and even new business models. Insights which ultimately and in ways less linear and obvious than carbon, will yield a substantial return on their investment. Insights that the ‘lazy’ end of carbon target setting have started to miss out on as the large pack of followers reach for ‘cookie cutter’ targets without really reflecting what they might mean for their business. The new dimensions brought to the table by water look set to permanently change the way sustainability targets are set.

Companies with significant exposure to water in their supply chains will be watching developments at Rio with keen interest and asking what new country level commitments could mean for their organisations. Meanwhile companies that wish to go beyond token gestures and knee-jerk targets will need to refresh their overall approach to sustainability target setting. The task will be more challenging than in the past but making targets mean something more specific to their corporate value chains will likely yield much greater long term rewards.

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