A rising tide on the corporate agenda – Overcoming the world’s water challenges together
Seen from space, it looks like there's water everywhere on earth - roughly 70% of our planet's surface is covered by it.
Yet the apparent abundance is a mirage. Just 2.5% is fresh and much of it is inaccessible, with well over half of our precious fresh water locked in glaciers and snowfields.
As the world’s population continues to swell – to almost 10 billion by 2050 according to UN estimates – people need more water. To drink, wash, irrigate crops, provide energy and drive industrial activity. And much of this growth will be in the developing world, where pressure on water resources is greatest.
Not only is the population growing, but the amount each person uses is also increasing. Global water demand by households is expected to grow 2% each year and for manufacturing companies it is over 4%.
Whilst demand rises, supply is becoming constrained. Climate change is affecting the distribution and availability of water. There have been seven major droughts in the past decade, from California to China, and at least eight major cities, including economic powerhouses Tokyo and Sao Paolo, are running out of water. Groundwater supplies – used by 2.5 billion people – are diminishing. Pollution, urbanisation, unsustainable agriculture and deforestation further threaten supply.
So what does this mean? Recent research by ING shows that of the world’s 60 largest economies, 29 are prone to water stress implying that future water demand might outstrip supply.
Surprisingly, several water-intensive sectors are highly concentrated in these countries. For example 88% of coal mining, 80% of textile production and 74% of global agriculture is located in water stressed countries. This clearly is not a sustainable situation. The World Economic Forum believes that water crises are now the greatest global risk in terms of impact, ahead of infectious diseases, interstate conflict and fiscal crises.
The challenges are enormous, but there is certainly cause for optimism. The glass is half full, rather than half empty. Water management – once a peripheral issue – is now accepted as central to development. Ban Ki-moon, UN secretary general, noted: “Water flows through the three pillars of sustainable development – economic, social and environmental.”
The Millennium Development Goals (MDGs) helped to focus political attention. The MDG target for water was achieved in 2012 – a remarkable three years ahead of the 2015 deadline – when 88% of the population achieved access to clean water.
And earlier this year, world leaders adopted 17 new Sustainable Development Goals (to be achieved by 2030 – but hopefully sooner), including one focused on water and sanitation. The objectives include equitable access to safe and affordable drinking water for all; access to sanitation; improving water quality by reducing pollution; and, crucially, increasing water-use efficiency.
Water-use should be a key focus for all businesses, regardless of size or sector. A 2014 survey of 174 Global 500 companies by environmental data specialist CDP showed that 22% believe issues around water could limit the growth of their business. The survey also suggested that, encouragingly, companies are increasingly addressing the threat. Ultimate responsibility for water management sat at board level for 62% of respondents, up from 58% in 2013.
Businesses need to conserve water to meet efficiency targets, reduce costs and manage environmental concerns. A good starting point is to implement a robust water management policy, with a senior manager ultimately accountable for it. A senior executive who can drive it forward and inspire the team.
When it comes to our most precious resource, we are all in it together – a rising tide lifts all boats.
Gerben Hieminga, Senior Economist, ING
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