Global Water Risk: Building a Resilient Business

September 2016

Classed by the World Economic Forum as the world’s number one long term risk, water crisis is a key issue impacting on a huge number of businesses, from energy production, to agriculture, food production, apparel and heavy end use industries such as beauty and personal care, laundry detergent and laundry appliances. This report looks at how a range of companies are tackling this pressing concern, from supply chain management, to community initiatives and product innovation.

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Water crisis rising up the agenda

In 2015, the World Economic Forum named water crisis as the number one long-term global threat. Still underestimated by many businesses, water risk is a very serious and complex issue which threatens wildlife, human access to clean water and continuation of business through scarcity, flooding and pollution. A well-managed water strategy, conversely, can help to build a resilient and innovative business and a strong ethical brand image.

Huge potential impact on business

Water resilience is an important issue for a large number of businesses, from food production, to clothing, to laundry appliances. Even where water is not a key part of the manufacturing process, it is often critical to provision of raw materials, or to the end use of the product.

Three main impact areas: operational, reputational and regulatory

Businesses need to consider three main areas of impact: operational (managing water resources to maintain business continuity both in direct operations and the supply chain); reputational (managing company image among local communities and fellow watershed users, investors and end users) and regulatory (keeping on top of regulatory change that may raise additional costs or rationing on water).

Strong water management creates opportunities and a resilient and innovative company

Companies that manage water risk well do so throughout the company and throughout their supply chain through clear, measurable and time-specific goals. They consider the full watershed context for maximum resilience, working with other users of the river basin to optimise access for all. This not only builds resilience but also opens up opportunities for cost efficiencies, brand differentiation and end product innovation.

introduction

Scope

Key Findings

Executive summary

Water resilience: a key global issue

Water crisis: The number one global long-term risk
Over-extraction of water has serious consequences
Baseline water stress: A global map
Key areas of water stress

Why care about water?

Why care about water? Risk avoidance
Why care about water? Water management opportunities
Squaring the circle: Water management across production chain
I ndustry fails to sufficiently engage with water stress issues
CDP water stewardship survey shows gaps in engagement
Operational issues: Building business resilience
Operational issues: Creative solutions generate opportunity
Operational issues: T he importance of managing the supply chain
Reputational issues: Managing perceptions
Reputational issues: the importance of social licence
Reputational issues: Opportunities through water stewardship
Reputational issues: Water management can win or lose investors
Regulatory issues: Increased intervention likely to hike up costs
Regulatory issues: Managing public water governance

Market impact

Water footprint varies along supply chain by industry
Soft drinks: High level of water awareness, high exposure to risk
Soft drinks: Improving stances on water security
Beer: Water as key ingredient and key agricultural input
Beer: Starting to look into the supply chain
Food production: High risk industry for water scarcity issues
Food production: Leaders in water stewardship
Laundry detergents: Consumer use is key
Laundry detergents: Water use zeroes in on the developing world
Beauty and personal care: Lowering water use at consumer end
Beauty and personal care: Lower foam options

Conclusions and recommendations

Towards a water policy

Methodology and definitions

Data parameters
Methodology and sources

Internet vs Store-based Shopping

Further Insight
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