A watershed moment
The risk of water shortages is real and growing—and across industries, projects to secure a water supply keep business from drying up.
BY SARAH FISTER GALE
Conserving the water supply isn't just the right thing to do. For many organizations, it's an operational requirement.
From beverages to blue jeans, product production often relies on large amounts of water. But this once prolific resource is getting harder to come by. Nearly half the world's population will be living in areas of high water stress by 2030, according to the United Nations, and demand for water is projected to exceed supply that year by 40 percent, according to the World Bank-sponsored 2030 Water Resources Group.
“The C-suite has switched on to the need to address water governance as a risk-management issue.”
—Gavin Power, United Nations Global Compact CEO Water Mandate, New York, New York, USA
Population increases, growing economies and climate change are only expected to exacerbate the issue. That's why organizations across sectors—ranging from fashion to pharmaceuticals—are launching major projects and programs to mitigate water risks across their supply chains and operations, says Gavin Power, the New York, New York, USA-based deputy director of the United Nations Global Compact CEO Water Mandate, a public-private initiative that helps companies develop, implement and disclose water sustainability policies and practices.
“The C-suite has switched on to the need to address water governance as a risk-management issue,” Mr. Power says. “Managing that risk is how they build the business case for these projects.”
Heineken N.V., for instance, has a goal to reduce water consumption in its breweries across the globe by 30 percent through efficiency initiatives that range from upgrading existing equipment and taps to installing innovative wastewater treatment systems. Given that each glass of Heineken beer is 95 percent water, these water management projects help ensure the Amsterdam, Netherlands-based company's continued success.
“From a risk-management point of view, water security and availability is extremely important to us,” says Michael Dickstein, global sustainable development director, Heineken, Amsterdam, the Netherlands.
To mitigate the full range of water-related risks, companies are investing in ever-larger water management initiatives. Global pharmaceutical giant Merck, for example, has allocated US$100 million for water and wastewater infrastructure improvement projects across its production and research facilities.
Sasol's water demand from the Integrated Vaal River System accounts for about 4 percent of the system's water supply.
But sustained executive support isn't guaranteed. Stakeholders expect to see business results—which can be difficult to quantify, says Gary Sharkey, global water lead, PwC, London, England. PwC is a member of PMI's Global Executive Council.
“Measuring the impact of water sustainability projects is more complicated than with carbon, because there are so many variables, including timing, seasons, rainfall and local infrastructure,” he says.
Measuring success is further complicated by external interdependencies. Because organizations share the water supply with the wider community, projects can be impacted by changes across the entire water system. That makes it difficult to compare the business value of different water projects. For example, is it better to reduce water use internally by 10 percent, or to invest in local infrastructure to reduce waste in the broader community? “It's less about the number and more about mitigating the risks you face,” Mr. Sharkey says.
The challenge for organizations just launching their portfolio is learning how to prioritize such projects, says Cate Lamb, global head of water at London-based CDP, which helps private and public organizations disclose environmental information. Fortunately, groups such as PwC, CDP, the CEO Water Mandate, the World Resources Institute and the World Wildlife Fund offer a host of tools and guidance on how to do things such as set a baseline water use and identify water-related risks in the operation and supply chain.
“Measuring the impact of water sustainability projects is more complicated than with carbon, because there are so many variables, including timing, seasons, rainfall and local infrastructure.”
—Gary Sharkey, PwC, London, England
The most logical place to start is with internal water efficiency projects, says Martin Ginster, head of environment: water, waste, land and biodiversity for Sasol, a global energy and chemical company based in Johannesburg, South Africa. Sasol's water demand from the Integrated Vaal River System accounts for about 4 percent of the system's water supply. So if there's a shortage because of a drought or increased competition for resources, it will impact operations, Mr. Ginster says. “Sasol cannot exist without water, so securing a high assurance of supply is very important to us.”
“Sasol cannot exist without water, so securing a high assurance of supply is very important to us.”
—Martin Ginster, Sasol, Johannesburg, South Africa
Sasol has introduced site-specific capital projects and interventions to improve site water balances. One of the most innovative projects to come out of the program was the full-scale pilot of an anaerobic wastewater treatment system using technology jointly developed and funded by Sasol and General Electric (GE) Power & Water. The Anaerobic Membrane Bioreactor technology system cleans wastewater generated by Sasol while providing biogas as a byproduct for power generation. The result is increased efficiency in the conversion of gas-to-liquid production, which is a key component of Sasol's production process. The process also produces almost 80 percent less biosolid waste.
“We can either use the biogas generated to make power or use it as fuel gas in the process,” Mr. Ginster says. “It also means that should there be a demand for electricity, then this easily covers the additional capital required and generates a net-positive economic benefit.”
Merck & Co. partnered with the Safe Water Network on field water project sites that provide access to clean water in India.
PHOTO COURTESY OF THE SAFE WATER NETWORK
GE and Sasol signed a partnership to develop the technology in 2010, the first full-scale pilot came online in November 2013 and the two organizations now are considering it for other plants. “It's a great example of a pilot project that we've brought to commercial scale,” he says.
THE WATER CYCLE
Once internal efficiencies were achieved in 2010, Sasol started looking for further opportunities to mitigate water risk beyond its own fence line. Although Sasol is one of the largest industrial users of water from the Vaal River, it draws much less than urban communities, which use 42 percent of the Vaal River system resource and experience up to 50 percent water loss because of aging infrastructure. After assessing the situation, Sasol realized that solving the community water loss issue would help the plant manage its water risk.
“From a risk-management point of view, water security and availability is extremely important to us.”
—Michael Dickstein, Heineken N.V., Amsterdam, the Netherlands
This was the business case Mr. Ginster's team used to support a community improvement project. In partnership with the Emfuleni Local Municipality and the Deutsche Gesellschaft für Internationale Zusammenarbeit, a German aid group, the project involved upgrading thousands of taps and washers in homes and schools, installing water meters, developing and training local plumbing professionals, and educating the community about water conservation. As a result of the 27-month project, which was completed in June 2014, 4.8 million cubic meters (1.3 billion gallons) of water were saved in 2014 alone, with an economic value of approximately ZAR26 million. “We recognize it's just one small step, but it demonstrates what can be achieved through such efforts,” Mr. Ginster says. “We hope it will provide insight for other business leaders in the space.”
Global water management projects are bolstering communities—and the bottom line.
THE COCA-COLA CO.
Project: Replenish Africa Initiative (RAIN)
Location: Multiple sites across Africa, including: Egypt, Uganda, Swaziland, South Africa
Purpose: The global beverage company aims to provide at least 2 million people with safe water by this year and to fund water projects in every African country.
Project cost: US$30 million
SASOL NEW ENERGY
Project: Boloka Metsi
Location: Emfuleni Local Municipality, South Africa
Purpose: The energy and chemical company upgraded municipal water infrastructure and is supporting Vaal River conservation plans as part of a 27-month project. In 2014, 4.8 million cubic meters of water were saved.
Project cost: ZAR10 million
Project: Monterrey Metropolitan Water Fund (FAMM)
Location: Monterrey, Mexico
Purpose: The Netherlands-based beer company teamed up with private and public groups in Mexico to help conserve water in the San Juan River watershed.
Project cost: US$5 million
MERCK & CO. INC.
Project: Safe Water Stations
Location: Andhra Pradesh, India
Purpose: The U.S.-based healthcare company partnered with the Safe Water Network to contribute additional field water project sites that provide access to clean water and limit exposure to waterborne diseases.
Project cost: US$1.5 million
In China, one of The Coca-Cola Co.’s multiyear projects aims to bring clean drinking water and basic sanitary facilities to 320,000 people.
PHOTO COURTESY OF THE COCA COLA COMPANY
Global beverage giant The Coca-Cola Co. also sees the business value in maintaining a sustainable water system. The company manufactures its products locally, which means it has operations in all but two countries—and in many communities where water is scarce.
Each of the company's bottling plants are required to conduct a water vulnerability assessment—often in partnership with local groups—to mitigate the issues. This approach has led the company to invest in several major community water projects over the years, including the Replenish Africa Initiative (RAIN), which aims to improve access to safe water for 2 million people across Africa by the end of 2015. RAIN is funded by a six-year, US$30 million commitment by Coca-Cola, which works with more than 140 partners to implement the projects sustainably.
Today, Coca-Cola is on track to meet its 2020 water replenishment goal by balancing through sponsored projects an estimated 68 percent of the water used in its beverages. That was accomplished in part by engaging in 509 community water projects in more than 100 countries, including the RAIN projects, says Greg Koch, senior director of global water stewardship, Coca-Cola, Atlanta, Georgia, USA.
“We know that to do business we need water. And when communities have access to safe water, you have the foundation of a thriving community, which is a better place for everyone to do business.”
—Greg Koch, The Coca-Cola Co., Atlanta, Georgia, USA
“Everything we do goes to back to risk mitigation,” Mr. Koch says. “We know that to do business we need water. And when communities have access to safe water, you have the foundation of a thriving community, which is a better place for everyone to do business.” PM
JUNE 2015 PM NETWORK
PM NETWORK JUNE 2015 WWW.PMI.ORG