Ethical Corporation Report Summary - Water Foot Printing

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The must-have guide to water ethics, footprinting, programmes and supply security How water risks factor into your operations, and what you should do to manage water use ethically Executive Summary The full report is available at www.ethicalcorp.com/water

Ethical Corporation NOVEMBER 2008

THE MUST-HAVE GUIDE TO WATER ETHICS, FOOTPRINTING, PROGRAMMES AND SUPPLY SECURITY

Contents

Foreword ............................................................................................................................................................3 Executive summary ............................................................................................................................................4 Introduction ........................................................................................................................................................6 Section 1: Water risks and opportunities ............................................................................................................7 1.1 Calculating your water risk factor ................................................................................................................7 1.2 Understanding your opportunities through water stewardship ....................................................................9 1.3 The big water issues: what every executive should know ..........................................................................10 1.3.1 Water insecurity ..................................................................................................................................10 1.3.2 Water costs and efficiency ..................................................................................................................12 1.3.3 Community partnerships and access to clean water ..........................................................................14 1.3.4 Water footprinting ..............................................................................................................................15 1.3.5 Water handprinting and neutrality ......................................................................................................17 1.3.6 Labelling, reporting and auditing ......................................................................................................19 Section 2: Strategies and solutions ................................................................................................................22 2.1 Company strategies ....................................................................................................................................22 2.2 Tools and techniques ..................................................................................................................................23 Section 3: Corporate case studies ....................................................................................................................25 3.1 Introduction to corporate case studies........................................................................................................25 3.2 Rio Tinto – developing a global water strategy ........................................................................................25 3.3 Intel – successful water efficiency measures, at the Ocotillo Campus, Arizona, US..........................................27 3.4 Coca-Cola – stakeholder engagement in communities ..............................................................................30 3.5 SABMiller – leadership in water footprinting ..............................................................................................33 3.6 Molson Coors – water stewardship ............................................................................................................35 Summary of corporate initiatives, trends and recommended action ................................................................38 Appendices ........................................................................................................................................................39 A: UN water map ..............................................................................................................................................39 B: Methodology and company questionnaire....................................................................................................40 C: Corporate water resources ............................................................................................................................42 References ........................................................................................................................................................43

THE MUST-HAVE GUIDE TO WATER ETHICS, FOOTPRINTING, PROGRAMMES AND SUPPLY SECURITY

Foreword

hy are businesses now concerned with water? The reasons are boundless. Climate change and political factors create a massive amount of unpredictability – though these risks are becoming better understood – and leading companies are successfully realising cost savings through increased water eciency. The message amongst the multinational corporations that have engaged with Ethical Corporation is clear: despite much of the dialogue around water, water is not the new carbon. Firstly, the nature of water risks differs om carbon emission risks. Secondly, the regulatory environments for water and carbon differ substantially. Thirdly, although both carbon emissions and irresponsible water management can have macro environmental impacts, water management requires a local approach that acknowledges contextual issues at each operational location. Fourthly, unlike carbon emissions, there is currently little global consensus on corporate water use measures.

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Finally, water scarcity oen reflects variable and unpredictable access at a local level, while carbon emissions remain a global challenge. Nor is water the ‘new gold’. Leading corporations have indicated that water is oen under priced. Many companies now voice the need for governments and water providers to price water so that it reflects its true value. Therefore, we advise that companies use this report to adopt water management strategies that complement existing environmental and social initiatives. This report shares some innovative strategies, promising monitoring tools, guidance on successful partnerships, considerations when calculating risks, and a discussion on early initiatives on labelling, reporting and auditing. Ethical Corporation is grateful to the corporate, NGO, academic and multilateral organisations that have contributed to this report through their thought leadership and water management experience.

Ethical Corporation

Acknowledgements This research was lead by Dermot Hikisch, environmental expert. Ethical Corporation is also grateful to the following contributors: Andy Wales, SABMiller, Director, Corporate Social Responsibility; David Grant, SABMiller, Sustainable Development Project Manager; Kristina Ringwood, Rio Tinto, Principal Advisor, Environment; Bart Alexander, Molson Coors, VP Global Alcohol Policy and Corporate Responsibility; Michael Glade, Molson Coors, Director, Water Resources and Real Estate; Tom Cooper, Intel, Environment Manager; Lisa Manley, Coca-Cola, Director of Environmental Communications; Gregory Luxford, Norwich Union, Energy and Water Division; Thomas Bergmark, IKEA, Head of Environment Department; Francis Binney, Royal Bank of Canada, Environmental Officer; Dirk Weytjens, Johnson & Johnson, Senior Director Environment, Health and Safety, Belgium; Scott Meakin, Petro-Canada, Environment Manager; Elisabeth Wenner, Kraft, Director of Sustainability Strategy; Brian Smyth, Dublin City Authority, Deputy City Engineer, Water Services; Brian Keown, Dublin City Authority, Divisional Engineer, Water Services; Katherine Neebe, WWF-US; Tensie Williams, Rainforest Alliance, Executive Director; Micah Silvey, US Green Building Council/ LEED, Manager; Brad Ewing, Global Footprint Network, Water Expert; Prof A Y Hoekstra, University of Twente/Water Footprint Network; Piet Klop, World Resources Institute, Senior Fellow; and Prof Petra Doll, University of Frankfurt, Hydrology, IPCC4 Co-Author

THE MUST-HAVE GUIDE TO WATER ETHICS, FOOTPRINTING, PROGRAMMES AND SUPPLY SECURITY

Executive summary

his research by Ethical Corporation aims to uncover effective water management and stewardship strategies. Water insecurity is a growing concern for global populations and has already had direct impacts on business operations around the world. Eleven leading companies with a history of water stewardship and success in responding to corporate water challenges were interviewed to provide insights into their own water strategies, implementation techniques and expectations for the future. These companies included Johnson & Johnson, IKEA, Petro-Canada, Royal Bank of Canada, Norwich Union, and several multinational beverage companies. The report also interviewed internationally recognised thought leaders on water issues, including the creator of the water footprint and an IPCC4 author, measurement experts such as LEED and the Global Footprint Network, global non-profit organisations the World Wildlife Fund and Rainforest Alliance, and municipal water experts. Several areas of consideration for water were discovered and five case studies were conducted with model companies. These included: a review of Rio Tinto’s global water strategy and implementation, Coca-Cola’s community partnership programmes, Intel’s facility water eciency measures, Molson Coors’ long history in water stewardship, and SABMiller’s new approach to water measurements with the water footprint. Water scarcity and overall water quality is becoming a larger issue for business as the global population grows, demographics change, and the effects of climate change become ever more present. Water insecurity is a risk to business; it can cause rising material costs, disruptions to supply, increased competition, and conflicts with local Governments and communities. Businesses that want to come out on top in the long run need to take water insecurity seriously by becoming proactive in their business strategy and daily operations to ensure long-term success and profitability. An overarching, global corporate water strategy was identified as key to successfully dealing with company water issues. This strategy must be sufficiently flexible to meet local water needs for each business unit and every level of staff must participate in its execution. Staff engagement can be a dicult

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task to accomplish and the support of senior management in the communication and delivery of a global water strategy is considered the only way to achieve company-wide implementation. A water strategy that sets targets for real reductions in supply chain and internal water use will generate cost savings and create indirect benefits for numerous stakeholders. Such a strategy can even bring about spin-off benefits for the environment and the company, such as reducing greenhouse gas emissions. Many companies have experienced low payback periods on individual water projects. Some payback periods were as low as nine weeks. Overall, an accurate cost-benefit analysis on water stewardship initiatives is still hard to accomplish given the complexity of the topic and the range of variables involved. As better pricing systems are developed for social and environmental considerations, this valuation technique will become more relevant. Several organisations have appeared in recent years to support companies transitioning to a more responsible water management position. The World Business Council for Sustainable Development, World Wildlife Fund, and the Water Footprint Network are all highly regarded for their expertise in negotiating the needs of water and business. These organisations provide support in developing and implementing water strategies and tools to better manage and measure water in business operations. Companies acting proactively on water management have the opportunity to gain a first-mover advantage on the competition. While water issues have been a primary concern for many leading corporations, there currently exists a huge lack of awareness of the risk of water insecurity in the business world. Water costs are expected to rise in almost every region of the world and growing demands om many different stakeholders will render water volumes available to business smaller and harder to obtain. Smart managers can seize this market opportunity to become leaner companies and be best prepared to deal with changing Government regulations and consumer interests. A strong water management plan is necessary for all companies and those that take a holistic and strategic approach will earn the highest longterm profits.

THE MUST-HAVE GUIDE TO WATER ETHICS, FOOTPRINTING, PROGRAMMES AND SUPPLY SECURITY

Introduction

usiness is impossible without water. It is essential to almost every product and service our society relies on. It is because of the global abundance of water that our economies have heretofore been able to operate without much need to deeply consider supply or the ethics of water management. The industrial era was a time of innovation and creativity like none the world had ever seen. Simultaneously it brought forth pollution that shocked global environmental systems and so the first sustainable water management advocates were born. Little by little, business has responded to this pressure and has begun to make more thoughtful choices. Nowadays, businesses are making sure that they set up in areas with ample supplies of water, that are easily accessible, non-controversial and of good quality. Yet there is a new consideration. Global climate change will bring extreme and unpredictable weather, along with new risks to business. There will be a water imbalance: too much water in one place and not enough in another. Businesses in the near future will need to be prepared to deal with the impacts om increased flood

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risks and challenges to a consistent water supply. Even for businesses with minimal need for water, a safe and continuous supply of it is as important to staff productivity as the electricity that powers the office lights and computers. For the heavy water-using industries, such as manufacturing and any sector that relies on agriculture, water scarcity can halt a business, thereby eliminating its profit. As the global population and commerce continue to grow side-by-side, all stakeholder groups will increasingly be looking to ensure fair access to quality eshwater supplies and Governments will begin to choose sides. As a whole, business’s current understanding of water issues, their potential risks, and the market opportunities are only just starting to emerge. By joining some leading companies in addressing the challenges of water insecurity, businesses have an opportunity to strategically minimise their long-term water risk exposure, realise direct operational costsavings, gain a competitive advantage on the competition, and improve their brand image through constructive community partnerships.

Ethical Corporation report centre Recent publications cover topics such as anti-corruption, voluntary initiatives in CSR, emerging market issues, and managing carbon emissions. You can also visit Ethical Corporation’s website and download some free research papers: www.ethicalcorp.com/reports Anti-corruption, ethics and compliance in Russia Practical information to develop local compliance strategies and overcome corruption challenges. For more information, current prices or online ordering, visit: www.ethicalcorp.com/russia Anti-corruption, ethics and compliance in China and Counter corruption in your supply chain in China Learn more about the issues critical to your operational security, ethical management and success in China. For more information, current prices or online ordering, visit: www.ethicalcorp.com/china Best practices for designing effective ethics programmes Find out which ethics and compliance training is most effective and productive. For more information, current prices or online ordering, visit: www.ethicalcorp.com/ectraining How to manage carbon reduction, and make it pay A hands-on management briefing on real-life ways big UK companies cut carbon, and their costs. Order online or obtain more information at: www.ethicalcorp.com/crc Corporate greenhouse gas emissions reporting Learn how your competitors are calculating and verifying their GHG emissions – and discover which metrics and verification standards will work for you. For more information, current prices or online ordering, visit: www.ethicalcorp.com/greenhousegas Guide to industry initiatives in CSR Get the inside track from some of the world’s key industry-based initiatives. For more information, current prices or online ordering, visit: www.ethicalcorp.com/initiatives Job-specific guides for embedding CSR throughout your company Winning methods for integrating sustainability into operational departments including communications, finance and facilities. For more information, current prices or online ordering, visit: www.ethicalcorp.com/csr Essential strategies for effective emissions trading and offsetting With practical information from the leading companies, this report is everything you need to develop your company’s emissions trading and offsetting strategy. Including case studies from 15 companies across industry. For more information, current prices or online ordering, visit: www.ethicalcorp.com/emissionstrading The must-have guide to water ethics, footprinting, programmes and supply security Learn how water risks factor into your operations, and what you should do to ethically manage water use. For more information, current prices or online ordering, visit: www.ethicalcorp.com/water

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