By 2050, the United Nations Environment Programme estimates that 70 per cent of the world’s GDP will be produced in water-scarce areas. Indeed, the World Economic Forum’s Global Risk Report last year identified water shortages as the biggest threat on the planet in the next 10 years, with urbanisation as the key cause of this threat.
How can businesses respond to this urgent need for better water management?
Speakers at Resources 2050, a roundtable discussion hosted by French service and utility company Veolia earlier this month, sought to outline some responses that companies need to consider.
The dialogue, featuring speakers from non-profit World Business Council for Sustainable Development (WBCSD), Danone and Veolia, was held on July 11 on the sidelines of Singapore International Water Week 2016.
Philippe Joubert, special envoy for climate change and energy for WBCSD, a network of CEOs collaborating on solutions that drive sustainable development, voiced the challenge facing business leaders today.
“The way we were doing business is finished. A new business model is coming,” he said. Consumers will increasingly be asking how businesses are adapting to a new landscape in which we all have to meet climate targets agreed at the recently-inked Paris Agreement last year, he explained.
The discussion about water resource management, however, cannot be divorced from energy, Joubert said, citing the shutdown of coal power plants in Farakka, India, earlier this year. The plants had to shut down due to a lack of water from surrounding areas to cool it, hence disrupting energy supply to five states for 13 days.
Companies will almost surely have to impose carbon pricing—the cost applied to carbon pollution to encourage reductions in greenhouse gases—on their products and services in the future, Joubert said.
In addition to carbon pricing, organisations will also have to factor in the true cost of water to derive the cost of any product or service due to the inherent relationship between water and energy, he added.
The way we were doing business is finished. A new business model is coming.
Philippe Joubert, special envoy for climate change and energy, World Business Council for Sustainable Development
Veolia has been striving to determine the true cost of water within its company and has been helping others to do the same.
The French company’s vice president and global director of food, beverage and biofuels market, Laurent Panzani, gave several examples of how Veolia had managed to address water risks with its food and beverage industry partners.
The first was of a Nestlé dairy plant in Mexico, which reclaims water from condensed- and powdered-milk production. The plant now relies solely on the recycled effluent, which is channelled into plant processes and operations. In the past, it was drawing 1.6 million litres of water per day from groundwater reservoirs.
Another project that Veolia worked on with Dutch coffee roaster Douwe Egberts Master Blenders (DEMB) used spent coffee grounds—reducing the amount of natural gas required—to generate steam for its processes.
By reusing the 33,000 tonnes of the by-product it generated each year, the plant in Joure in the Netherlands offset its carbon dioxide emissions by 14,000 tonnes per year. Its investment, which should last for 10 years, has led to savings of about 1-2 million euros, said DEMB’s technology manager Weibe Jongsma.
At the organisational level, Veolia has been working together with food giant Danone to develop projects that create value, in both sustainability and monetary terms.
Both companies signed a global alliance agreement focusing on water cycle management, waste management, sustainable agriculture and energy efficiency in Paris at the United Nations climate meeting last December.
Danone’s chief executive officer, Emmanuel Faber, believes that the company needs to look beyond its supply chain to engage in the circular economy—which keeps resources in use for as long as possible—in light of rising commodity prices.
Danone Waters health and sustainability director David Roos added that Danone has been taking big steps in water sustainability and intends to set up a dedicated organisation to centrally manage water as a strategic resource by early 2017.
Its long-term goal is to reduce water consumption by a third by 2020. Danone’s water usage is currently around 250 billion litres per year across its four business streams.
One of Danone’s strategies in protecting water resources is to foster alliances, two of which are in Indonesia.
One of its Indonesian partners has adapted Danone’s SPRING (Sustainable Protection and Resource Management) evaluation method to the Indonesian context: the tool enables the creation of an annual improvement plan that ensures careful use of water, both in terms of quality and quantity.
Indonesian non-profit, the Groundwater Working Group, and industrial groundwater users are advocating for the Indonesian version of SPRING, Matriks Penilaian Perlindungan Sumber Daya Air Tanah (MATA PERSADA) to become an official assessment standard of groundwater management by industries across the country to help guide the sustainable utilisation of groundwater resources.
MATA PERSADA was presented at the Singapore International Water Week—a leading water industry event—in July and received the award for best presentation at the event, Danone shares.
Danone is also partnering non-profit organisation The Nature Conservancy (TNC) and local non-government organisations to pilot a TNC financial tool called Water Fund in East Java, Indonesia. The Fund aims to collects funds from key upstream and downstream water users for the conservation and protection of the upstream watershed that they share.
“It’s very complicated, but when it’s done, it’s a very powerful and sustainable approach,” said Roos, adding that a Water Fund may take up to two years to get up and running.
Joppe Cramwinckel, WBCSD’s water director, added that the business community in India has also made strides in water resource management.
Within the last four to five years, nine Indian companies, including Tata Sons and Yes Bank, have pledged their allegiance to WBCSD. The Indian chapter of WBCSD is run by locals, which Cramwinckel believes is the reason for its growing membership.
“In India… the challenge was so intense that the case was already built. We didn’t have to convince them to be here,” said Deepa Maggo, WBCSD’s water associate for India, of the country’s growing WBCSD membership.
Cramwinckel said WBCSD plans to port India’s success to Southeast Asia, by enabling those in the region—through the sharing of resources and coaching—to take the lead.
“We’d like to shift from advocacy. We’d like to collaborate,” he said.