The Center for Responsible and Leadership just launched its most recent Research Note on the 22nd of April. This time we focused our analysis on Water as Value Driver for the Business.
In fact, as Prof Filipe Santos mentioned in June 2020 during our Water Summit, soon the price of water will increase and the quest for freshwater sources could eventually make it “more expensive than diamonds''. He was actually right and less than 6 months after that statement, water started to be traded in the Wall Street markets for the first time ever. Water's debut in the stock exchanged was announced as a historical moment: “Water Is Running Out So Fast, Wall Street Is Trading It Like Gold and Oil”.
United Nations estimates that, in 2050, 6 billion people will be suffering from clean water scarcity. In fact, the water challenge is escalating, and it promises to be a major issue in the Future.
The Research Note “Water: a Key-value driver for Sustainable Growth” aims to build on this big challenge of water economic scarcity and explains Why and How companies should definitely look for water with a value creation lens. This research analyses the water-stress problem in a clear and concise way and exposes how critical it is for companies to act on an issue that is affecting their entire value chain and, consequently, their bottom-line and license to operate.
Companies have two ways to face the water challenge: either they ignore and risk increased costs, reputation loss and a fragile license to operate in the near future, or, they can try and understand the risks and go for the opportunity. In our Research Note, we propose the second option since there is clearly a strong business case for action!
We analyze four main Water Risks: 1) physical/economic, 2) reputational, 3) license to operate and regulation and 4) pressure from the investment market. With examples from companies like Coca-cola, Nestlé, Unilever, Mitsubishi and many others, we illustrate how water can become, rather than a trivial risk, a huge damaging cost. We explain, for example, how water issues ruined a Coca-Cola business in India or how Burberry and the entire textile sector had to adapt their production to comply with water-demanding requests from their stakeholders.
Bearing all of this in mind, companies need to adapt. The first ones to move fast will capture a key competitive advantage and will turn water challenges into opportunities to innovate and conquer the markets with a solid and sustainable strategy. In this context, we finish our Research Note with two proposals: a guide for the Water Stewardship Implementation Process and a suggestion of 3 Areas of Involvement for better water management (efficiency, reuse and awareness).
Either a big company or a start-up…curious about what these two proposals mean and how to apply them in your company? Find out more in the Research Note.
Water is a valuable resource. Don’t take it for granted!
Have a great and impactful week!
Filipa Pires de Almeida
Fellow Researcher & Project Manager
Center for Responsible Business and Leadership
This article refers to edition #85 of the "Have a Great and Impactful Week" Newsletter.
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