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NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
NZC - Matthew
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NZC - Matthew

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  • 1: http://www.usf.uni-kassel.de/cesr/index.php,Center for Environmental Systems Research, University of Kasselhttp://news.bbc.co.uk/2/hi/science/nature/7821082.stm2: www.unwater.org
  • www.unwater.org
  • 47% of the worlds population will face severe water shortages by 2030 - http://www.reliefweb.int/rw/lib.nsf/db900sid/EGUA-8BQMMP/$file/OCHA_OPB_Water_Sep2010.pdf?openelementIt is projected by 2030, 47 percent of world population will be living in areas ofhigh water stress. (OECD) - Organization for Economic Cooperation and Development
  • 1: Woods Institute for the Environment Stanford University, 2008.2: “Environment & Globalization: 5 Propositions”, 2007.3: World Business Council for Sustainable Development, Nov 2008.4: “The urbanization of Africa: Growth areas,” The Economist, Dec 13 2010.
  • the number of investors seeking corporate water information doubled in 2010 (collectively representing $43 trillion in assets)1
  • Transcript

    • 1. Water Stewardship – a matter of business value and risk Matthew Segur Net Zero Water Session 1 – Drop for Drop: Net Zero Approaches for Water Quantity and Quality October 23, 2013
    • 2. Sustainability
    • 3. What changed and why now? New paradigm Old paradigm • Abundant raw materials • Cheap energy • Limitless sink for waste • Environmental and social performance matters • You and your supply chain
    • 4. Sustainability drivers Internal performance drivers • • • • Cost savings Source of innovation Business continuity Talent retention Value stream drivers • • • Customer interests and brand value Value chain transparency Industry collaboration External performance drivers • • • • Government regulations Demand for transparency and sustainability reporting Shareholder resolutions Social license to operate Sustainability is no longer an option, but a business imperative
    • 5. Why is sustainability a business opportunity? Sustainability is value creation and innovation • Revenue: new products/services, brand, brownfields, carbon • Risk management: transparency and reporting, supply chain, license to operate • Reduced operating costs: resource efficiencies; materials, energy and water
    • 6. The Global Water Condition
    • 7. Water availability has declined significantly since 1975 and is expected to continue this trend Water availability: 2000 2025 1975 Extreme Scarcity <500 Scarcity 500–1,000 Stress 1,000–1,700 Adequate 1,700–4,000 Abundant 4,000–10,000 m3/person/year Surplus >10,000 Ocean/ Inland Water No Data
    • 8. Water withdrawals are predicted to increase by 50 percent by 2025 in developing countries, and 18 percent in developed countries.
    • 9. 47% of the population will face water shortages by 2030
    • 10. As the expansion of the global economy progresses, several forces put increased pressure on fresh water and other natural resources Rapid Population Growth As human life expectancy increases and the birth rate continues to rise, human demands on the environment have increased exponentially. “Freshwater is crucial to human survival and well-being, yet 1.1 billion people have no access to safe water supplies, and 2.4 billion lack access to basic sanitation facilities. It is estimated that two-thirds of the world's population, including 25 African countries, will live in water-stressed areas by the year 2025.”1 Expansion of Business Activity Rising Middle Class in Emerging Markets The rate of poverty alleviation is increasing especially within China and India which will increase water consumption from always needing clean fresh water to wanting jacuzzis or private swimming pools. “By one calculation, there are now more than 1.7 billion members of „the consumer class‟—nearly half of them in the developing world. China and India alone claim more than 20% of the global consumer class, totaling 362 million, more than in all of Western Europe.”2 Accelerating Rate of Urbanization Business activity from industrialization to services continues to expand at rapid rate. Expansion of business activity requires significantly more water supply and sanitation. Urbanization requires significant investment in water infrastructure in order to deliver water to individuals and to process the concentrations of wastewater from both individuals and business. “Virtually every industrial activity requires water. The likes of power-generation, mining, paper and drinks sectors are particularly water intensive. Non-industrial services, meanwhile, such as tourism and entertainment, can depend heavily on water resources as well.”3 “Over a third of Africa's 1 billion inhabitants currently live in urban areas, but by 2030 that proportion will have risen to a half…the population of some cities is set to swell by up to 85% in the next 15 years.”4
    • 11. Water issues could have a material impact on city stakeholders – the private sector  Rising demand and limited supply could lead to higher and more volatile energy and water availability Direct costs Increasing regulations and continuity of supply Reporting and product footprinting Reputation and Brand Value Source of innovation  Communities chain could levy taxes or surcharges on embedded water that increase a company’s delivered cost  Tightening local environmental regulations, particularly around water, could increase suppliers’ costs  Governmental restrictions on water withdrawals threatening water availability  Investors are increasingly demanding greater transparency – and quantification – of water related impacts  Conducting a product footprint (e.g., LCA, carbon footprint, or water footprint) can help companies understand and communicate drivers of environmental impact  Rising public concern about water scarcity as consumers become more familiar with the issue could threaten corporate reputations, even when impacts are several tiers upstream in the supply chain  There is an opportunity to build a company’s brand as a good environmental steward through proactively identifying and addressing supplier’s environmental impacts in China  Natural resource scarcity (whether energy, water, or any other input) serves as an additional constraint that can spark innovation  New business models may emerge to creatively address water and other environmental challenges
    • 12. Stewardship
    • 13. Physical, regulatory and reputational risks increase with water scarcity Supply Chain Product Use Manufacturing  Temporary nonavailability of water disrupts supply chain  Temporary non-availability of water  Non-availability or disrupts operations scarcity of water required for using  Increased capital expenditure on Physical product or service water treatment, water extraction, Risk  Water scarcity drives up limits growth input prices (~2%-20%) or alternative technologies to circumvent water problems raises costs  Intensifying competition for scarce water constrains growth Regulatory  Suspension or withdrawal of supplier's Risk water license or discharge permits disrupts supply chain  Competition with household water demand constrains suppliers' growth Reputation  Responsibility "by Risk association" for suppliers' water pollution damages brand or reputation, hinders growth  Intensifying competition for scarce water constrains growth  Reallocation to more urgent needs during drought disrupts operations  Suspension or withdrawal of supplier’s water license or discharge permit disrupts operations and/or constrains growth  Increased capital expenditure on wastewater treatment to meet or exceed standards  Competition with household demands, or pollution incidents, damages brand or reputation, hinders growth  Non-issuance of water license or restrictions on use of particular products or services due to water intensity raises costs or checks growth Impact on financial performance  Lost revenue from disruption of water supply  Higher costs from: − Supply chain disruption − Changes in production processes − Capital expenditure to secure, save, recycle, or treat water − Regulatory compliance − Increasing price of consuming or discharging water  Public outcry regarding water intensity of product damages brand, reputation, hinders growth  Delayed or suppressed growth, potentially impacting share price  Potential higher cost of capital for businesses that rely heavily on fresh water resources
    • 14. Water management to stewardship Water Management Water Stewardship Focused on immediate, direct and indirect business costs of scarcity and efficient use of the resource Focused on long-term availability of clean water for stakeholders in impacted watersheds Internal Operations Value Chain Business Partners • Consistent, high-quality supply can no longer be assumed given increasing drought and flooding • Complex supply chains cross watersheds and contain hidden water-related business risks • Managing water as an input must extend beyond the unit cost of water to include business continuity, brand value, and regulatory considerations • Hidden risks in the supply chain magnify exposure to water risk • Effectively managing water-related business risk through the value chain is paving the way for innovation and new business opportunities Watershed Stakeholders • Effective long-term water stewardship occurs on the scale of the local watershed in partnership with local communities and NGOs • Disclosure of water-related efforts allows companies to gain trust, build relationships, and mitigate tensions • Watershed-level stewardship has strategic value for global business Companies are at different levels of maturity with respect to addressing water scarcity; stewardship is the most inclusive and long-term approach.
    • 15. Elements of water stewardship A step forward in one category improves water stewardship performance DISCLOSE • Disclose water-related information to stakeholders • Publish water-related analysis in financial reports • Audit/assure water-related data • Be transparent in reporting GOVERN • Oversee water policy, strategy, or management plan at board level • Develop concrete water-related goals • Innovate and invest in water technology • Manage brand and reputation • Establish water management accountability through public policy and lobbying efforts Water Stewardship COLLABORATE • Identify stakeholder concerns (employees, suppliers, local communities, governments and regulators, NGOs, other water users (industry or companylevel), customers, investors) • Engage internal and external stakeholders on water-related issues FOOTPRINT • Direct operations: Measure water withdrawals, recycling/reuse, waste water discharges (quantity and quality) • Indirect operations: Measure supplier water use and discharges (quantity and quality) • Measure water footprint of products ASSESS RISKS & OPPORTUNITIES • Assess physical/operational, regulatory, and reputational waterrelated risks (direct and indirect operations) • Prioritize risks and develop a mitigation plan • Evaluate and implement waterrelated opportunities (direct and indirect operations)
    • 16. Another view of stewardship Watershed protection Water infrastructure repair Preservation Community outreach programs to provide safe drinking water Water technology funds Collective Action Innovation Technology to record water consumption metrics
    • 17. Benefits of water stewardship Business Continuity Innovation Brand Value • A comprehensive view • Historically, water • Sound water of corporate water use management practices stewardship can align can have significant have focused on corporate and financial impact securing water environmental goals (e.g., reduced potential supplies, and • Avoiding negative for supply managing waste consumer perceptions disruptions, capital discharges can lead to increased costs to • Identifying reuse and revenues secure, process, and recycling opportunities discharge water, and can reduce costs and compliance issues) diversify supply, • These benefits can be mitigating risk in direct leveraged in the supply operations chain and in direct operations License to Operate • Water is a local issue and misuse of water resources can lead to regulatory or consumer conflict • Considering operational and local community needs can maintain this license in the supply chain and direct operations, and support business continuity and brand value Risk Mitigated Operational   Regulatory Reputational        Responding to water-related risks can mitigate risk and identify opportunities across a company’s value chain
    • 18. Corporate Action
    • 19. Collective action
    • 20. Companies have engaged in innovative partnerships around water to protect and enhance their reputations Coca-Cola WWF alliance goals and progress Conserve 7 key watersheds Improve operational water efficiency Reduce supply chain water use Reduce energy and carbon emissions Working with governments to change water management practices Halfway to achieving 20% water efficiency improvement by 2012 Working with growers to define and implement sustainable farming Energy and emissions growth slowing but absolute reductions will be difficult Brand value, operational resiliency and license to operate Inspire a global movement Participation in the CEO Water Mandate Funding, heightened awareness, expanded influence
    • 21. PepsiCo – human right to water and value chain PepsiCo Agrees to Policy Respecting Human Right to Water May 2009 PepsiCo is the first publicly traded, multinational corporation to create a policy in support of the human right to water. In 2003, PepsiCo’s water-use license was revoked in Pudussery, India, because of claims that its bottling plants there were over-consuming and depleting community groundwater, which is in conflict with the Human Right to Water. Supply Chain Collaboration In India, PepsiCo educated farmers on “direct seeding”, which reduces water use by as much as 30 percent and saved more than 5 billion liters of water in 2009
    • 22. Other companies have found that partnering with local suppliers and communities can generate “shared value” between business and society CORPORATE SHARED VALUE (CSV) Policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates Diageo’s Water of Life program Nestlé's supplier partnerships   The goal: Obtain a reliable supply of premium coffee for Nespresso by helping farmers break the cycle of low productivity, poor quality, and environmental degradation that limits production volumes  Working with growers: Provides advice on farming practices, guarantees bank loans, and helps secure inputs  Establishing local facilities: Measures coffee quality at point of purchase and pays premium directly to growers, cutting out the middle man The goal: Aspires to extend access to clean water to 1 million new people in Africa every year through 2015  Community involvement: Positive contributor to the stewardship of water resources through watershed protection and sustainable water management  Direct operations: Improving water efficiency and decreasing water pollution across bottling facilities and engaging directly with suppliers in water-stressed countries to encourage sustainable agriculture practices  Collective action: Working with others to accelerate progress on the water/sanitation Millennium Development Goals
    • 23. Conclusions
    • 24. Point of view • Water risks and opportunities should be viewed differently than other resources (e.g., carbon) – Water is a shared resource – Water is local; it is not fungible – Water has economic, environmental and social dimensions, all of which must be considered • Water can have value well beyond its price, and that value varies by industry sector – For some companies it has reputational risk and corresponding brand value – For others it has regulatory risk and as such it is managed as a compliance issue – For many, it may be a combination of both • Water stewardship requires collaboration with internal and external parties; building a water strategy is beyond risk management and includes engagement with multiple stakeholder groups Developing a comprehensive water stewardship strategy can position companies to effectively manage water-related risks while also identifying key opportunities.

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