Thinking Strategically About Water-related Risks in Your Supply Chain
A year ago, when commodity prices were skyrocketing, all of us were forced to recognize the risks associated with the fundamental goods and services needed to run our businesses. Many were scrambling to lock in stable, reliable –and affordable –sources for fuel, transportation, utilities, etc.
But, have you ever stopped to consider how your company would fare in an economy constrained by scarce water?
Water is a critical raw material, and when you think about it, you’ll realize it’s even more important than oil –simply because there are no alternatives. Climate change and global consumerism are already having an impact on water availability, so clearly, it’s time to face the question: Is your company preparing for the emerging supply risks related to water scarcity?
For insights, be sure to read Mindy Lubber’s excellent “Expert Perspective: Growing Business Risks From Global Water Scarcity,” which is contained within GE’s new Citizenship Report.
Lubber, the president of Ceres, cites a recent report by Ceres and the Pacific Institute that evaluated eater-related risks in eight water-intensive sectors: technology, beverage, food, electric power/energy, apparel, pharmaceuticals, forest products and mining.
“Our conclusion,” she writes, “is that each of these sectors faces serious near- and long-term economic risks related to their water dependence.”
How can you begin to think strategically about water? Lubber has suggestions to get you started. She advises that companies:
- Measure their entire water footprint;
- Assess physical, regulatory, and public perception risks associated with their water use, in their operations, throughout their supply chain, and in end products;
- Align their water footprint evaluations with the company’s energy and climate risk assessments;
- Elevate water as a governance priority for executives and board members;
- Disclose to investors and other outside stakeholders water management strategies, performance data, and goals;
- Boost engagement with key stakeholders such as local communities, shareholders, suppliers, government regulators, and employees.
