Executive summary
Amid growing global awareness of water scarcity, 2023 was heralded as the "year of water," drawing attention to the need for businesses to adopt sustainable water management practices. This call to action was motivated by the projection that half of the world's urban population could suffer from water scarcity by 2050, potentially destabilizing economies and triggering an increase in the incidence of drought.
Water scarcity encompasses both physical shortages, when natural replenishment cannot meet demand, and economic shortages, characterized by inadequate infrastructure and management. Expanding the framework further, water stress also contemplates issues of water quality and accessibility, thereby affecting corporate risk assessments and compliance with environmental, social, and corporate governance (ESG) principles.
The acceleration of climate change is expected to open a 40% gap between water demand and supply by 2030, disproportionately affecting the agricultural sector, the largest user of water. Increased scrutiny of water consumption puts pressure on companies to manage water footprints carefully to mitigate potential regulatory repercussions and earn public trust through transparent practices and community engagement.
Disclosure practices for corporate water use are evolving. Initiatives such as the Taskforce on Nature-related Financial Disclosures (TNFD) incorporate water risks into broader sustainability reports. Addressing water-related concerns is thus becoming a fundamental aspect of corporate responsibility, involving the planning and adoption of advanced management strategies and technologies.
New global interest and initiatives, such as the upcoming appointment of a UN special envoy for water, acknowledge the connection of water issues with climate and nature concerns. Advances in water technologies and nature-based solutions (NbS) serve strategic objectives, providing environmental, social, and economic benefits, especially in the densely populated regions that are most at risk.
The concluding advice underscores how crucial it is for businesses to take a proactive approach to the water crisis. Engagement with policy discussions, alignment with consensus-driven initiatives such as the CEO Water Mandate, and compliance with international standards will reflect a legitimate commitment to environmental stewardship. Companies must utilize transparency, innovation, and advocacy to contribute meaningfully to sustainability and cement their roles as guardians of natural resources.
In the broader context, the triple water, nature, and climate crisis poses significant business and geopolitical concerns. Addressing it requires a thorough reconsideration of water strategies by businesses, emphasizing action plans that are well-grounded and detailed, with clear targets that acknowledge the interplay of various environmental factors. Focusing on aligning operational processes with the realities of water scarcity and climate change is critical for advancing toward a sustainable and resilient future.
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