The water risk to your business

Industry's global demand for water is set to grow exponentially by 400 per cent from 2000 to 2050, which spells trouble for an already water-stressed world. Veolia Water Technologies has developed a set of tools which help companies manage this demand.

Water is a commodity that all life on earth needs for survival, but population growth, climate change, and industrial activities are placing this precious natural resource under stress, threatening both the quantity and quality of freshwater reserves. 

Today, 738 million people still lack access to clean water and United Nations (UN) Water expects global water demand to further increase by 55 percent by 2050.

The manufacturing industry is by far the thirstiest sector of all, and will consume a staggering 400 per cent more water by then compared to 2000, according to the agency.

Industry is also responsible for dumping between 300 to 400 million tonnes of heavy metals, toxic sludge and other waste into waterways every year, according to the United Nations Environment Programme. 

While compromising on conserving water or treatment processes can help companies make quicker profits in the short term, mismanaging water resources does not pay off in the long run.

In fact, failing to safeguard water resources can leave a company exposed to financial, operational, regulatory, and reputational risks and it is in a company’s interest to evaluate and address these potential pitfalls, says Michael Poonpipat, Thailand business development director of French wastewater treatment giant Veolia Water Technologies.  

For example, as clean water becomes an increasingly scarce resource, companies may find that they have to pay more to secure a water supply for their operations, driving up their expenditure on resources, explains Poonpipat.

Companies which cannot secure an adequate water supply may also not be able to meet their production quotas, he adds.

In addition to these financial and operational threats, a business’s biggest risk could be damage to its reputation, says Poonpipat.

Firms seen to be threatening water resources may also find themselves the subject of heated protests, as was the case with a proposed coal power plant in Krabi, Thailand.  

Villagers worried about the plant’s impact on the pristine wetlands and marine ecosystems in Krabi staged hunger strikes against the project in July this year, eventually leading Thai Prime Minister Prayut Chan-o-cha to put the project on hold.

Another company that knows this all too well is American coffee chain Starbucks, which in 2008 came under fire when an expose by a British tabloid revealed that one tap was left running at all times in every store worldwide, wasting as much as 23 million litres of water a day

In Singapore, Starbucks drew heavy flak from customers, while another coffee chain which did the same, Spinelli’s, was informed by the country’s national water agency, PUB, that it faced fines of up to S$50,000 if it continued. Both chains axed the practice soon thereafter. 

Initially, most companies may not be aware of the true extent of how water resources can affect them, says Poonpipat. But this quickly changes when they realise that their profit margins are lower than expected, he notes. Often, it is the financial impact of water risks that erode a business’s profits, he adds.

Understand water vulnerability

To help businesses understand and manage water risks, Veolia – which offers over 350 solutions for building and managing wastewater treatment technologies, including sludge treatment, desalination, and water reuse – has developed a set of ‘water audit’ tools that help companies start their journey to sustainability.

The first of these tools is the Water Impact Index, which analyses the volume of water extracted and released into the environment by a company. Beyond that, it also assesses how much stress the company puts on water resources, and the impact of water quality on manufacturing operations. 

By gaining a clear picture of their impact on every aspect of water resources from volume of water used to stress on the surrounding hydrological system, clients are able to set more efficient water strategies and mitigate challenges such as water scarcity, says the company. 

Another tool, called the ’True Cost of Water‘, breaks down water impact into three types of costs: direct costs, such as utility bills or investments in water treatment machines; indirect costs such as the administrative or legal fees that can be incurred if the company runs afoul of regulations; and risk-related costs, which look at things like the financial impact of a water shortage or how much a boycott would cost the company. 

Veolia developed both these tools about five years ago, and says that they are applicable across a wide range of sectors including power, oil and gas, food and beverage, agriculture, mining, fisheries, and more.

In Singapore, industry accounts for half of all water withdrawals, according to the Food and Agriculture Organisation’s Aquastat database. Here, the pharmaceutical and microelectronics sectors are among the heaviest water users, and hence the most exposed to water risks.

Among the Asian companies which have undertaken these audits is Malaysia’s national electric utilities company, Tenaga Nasional Berhad, which last year engaged Veolia to conduct Water Impact Index studies at seven of its thermal power plants.

In July this year, Veolia also clinched its first partnership with Thailand’s largest paper products supplier, which wants to expand its paper plant capacity. Over 12 weeks, Veolia will conduct an in-depth assessment of the plant’s water system using its Water Impact Index and True Cost of Water methodologies. 

Poonpipat shares that after a client receives an audit report outlining its water risks and vulnerabilities in detail, Veolia can also provide the solutions and recommendations to improve the firm’s water sustainability. 

Sometimes, these may be picked from the company’s vast range of water treatment, recycling, and reuse technologies, and in other instances, Veolia can help clients operate more responsibly by creating shared value. This is when both the company and other stakeholders in its supply chain benefit.

For example, a company which produces relatively clean ‘wastewater’ can sell, or donate it to a nearby industrial plant which may be able to use this water in its own operations, explains Poonpipat.

“Sometimes, all it takes is out of the box thinking”, he says.

And what about the payback period on investing in these audits and solutions? 

This figure often varies according to the nature of the industry, scale of the audit, and the type of interventions necessary, shares Poonpipat. Payback can also come from direct sources such as saving on water and energy bills, or more indirect means such as avoiding boycotts or legal trouble by practicing good water stewardship.

But generally, decision-makers often expect a payback period of three to four years, he says.

Although such water audits are not mandatory, the number of companies worldwide opting for such audits is increasing as water risks become impossible to ignore.

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