How Sustainable Are Business Practices in Managing the Water Resource?

  • 2019/09/27     Dresden, Germany

    Image: Seohyun Park/UNU-FLORES

    By Atiqah Fairuz Salleh, Communications and Advocacy

    We have heard of frameworks to hold businesses accountable for their carbon emissions. However, measures of the use of critical resources such as water within the business context have remained relatively underdeveloped.

    In his Nexus Seminar on “Sustainable Water Management Strategies: A Focus on Corporate Supply Chain Management” on 22 July 2019, Dr Jonathan Clive Morris (Chair of Sustainability Management and Environmental Accounting, TU Dresden) introduced a framework that would bridge that gap.

    The risks and challenges posed by climate change – particularly concerning water security and economic growth – have increasingly exerted pressure on businesses to operate more sustainably. Uncertainty around water scarcity and untenable growth are motivating businesses to regulate not only their own but by extension, the activities of others on their supply chain.

    However, how do businesses respond to water sustainability challenges? Dr Morris provided some context by looking at the challenges businesses face and their pressure points, before exploring some of the current frameworks and what businesses are doing to address these challenges.

    Against the background of measuring environmental impact in supply chains, the motivation behind the research presented is to engage the business community and find out how water is framed in their overall business performance. The goal is to create a framework that quantifies the systemic impacts of water efficiency in a supply chain to meet both economic and social objectives – perspectives that have often been overshadowed by the focus on productivity.

    Image: Seohyun Park/UNU-FLORES

    Recognising that real sustainable development should go beyond economic outcomes and include social and environmental outcomes, Dr Morris introduced the concept of “water sustainable development” and related it to particularly how water can be integrated with corporate reporting. He went on to discuss indicators and indices that explore the measurement of water sustainability.

    The Water Sustainable Development Index (WSDI) allows for water sustainability to be compared across countries. It looks at the value of Gross Domestic Product generated by every cubic metre of freshwater abstracted and consumed (Water Productivity Index) and the Social Development Index, which includes an income component reflecting the economic measure of freshwater consumption taken from the World Bank Database.

    While the WSDI helps frame the sustainable uses of water within the economic, environmental, and social perspectives at the national aggregate level, and would be instrumental to guide policy in that regard, its applicability to companies is at best for the assessment of risks at the macro level.

    Linking frameworks on supply chain management with resource dependency theory and sustainability reporting, Dr Morris discussed a study of the activities of supply chain actors in driving a sustainable approach towards the use and management of water resources.

    In an analysis of the annual and sustainability reports of 50 companies listed on the FTSE 100, it was found that one sector dominates the reporting of activities in water sustainability: the consumer staple industry. As it is consumer-facing, companies in this sector probably feel encouraged to show their more extensive shared benefits.

    During the Q&A segment, among the questions raised were on methodology and reliability. Addressing the WSDI, Dr Morris clarified that the current methodology does not account for a country’s production abroad. On reliability, a concern was raised on how reliable corporate sustainability reports are. Indeed, there may be ‘hidden’ narratives relating to water consumption behind sustainability disclosures. Besides, there is no guarantee that what is being disclosed takes place in reality.

    In his recommendations, Dr Morris calls for greater regulation. Governments can influence what companies report on and thus, the actions they take. There also needs to be more opportunities for companies to deal more with water resource dependencies and to make water management reporting a norm.

    Further Reading

    Koh S, J Morris, S M Ebrahimi, and R Obayi. 2016. “Integrated Resource Efficiency: Measurement and Management.” International Journal of Operations & Production Management 36(11):1576–1600.

    Morris, Jon. 2019. “Developing and Exploring Indicators of Water Sustainable Development.” Heliyon 5:1–10.