ESG: Corporate Responsibility in the face of Water Scarcity

INTRODUCTION:

Today, most of the world’s developed economies are facing Water scarcity in various parts of their nation. Rapid urbanization, population growth, and unsustainable water management have led to dwindling water resources and widespread water scarcity in various parts of the world. Water scarcity, which seemed to be a distant concern some 50 years back, is now a pressing reality which is affecting major parts of the businesses and corporate world. 

As climate change worsen the conditions and alters the precipitation patterns resulting in droughts and famines, there is an increased need for ESG. Through this blog post, we will try to understand more about the Water Crisis and how corporations should deal with it.

UNDERSTANDING WATER CRISIS with ESG:

Water scarcity occurs when the demand exceeds the available supply of freshwater resources. This imbalance in the water table can result due to various factors namely:

1. Population growth in developed cities
2. Urbanization
3. Deforestation resulting into loose soil
4. Climate changes resulting in droughts
5. Change in Agricultural practices resulting in a dip in underground water level bed
6. Industrial effluents contaminate freshwater resources, making it unsuitable for human use.
7. Encroachment of lakes and water catchment areas
8. Inadequate infrastructure for water storage and distribution, and so on.

The regions which are already battling with water stress are experiencing increased competition for water resources leading to esg consequences. As a result businesses and local people in these regions face erratic water supply, depletion in groundwater level and contamination of available water resources.

CORPORATE RESPONSIBILITY:

Corporate entities have a significant impact on water consumption and availability of freshwater due to their usage, supply chain and consumption patterns. Large corporations and businesses are major water consumers, and hence they are entitled to manage water resources sustainably and mitigate their water related risks. This includes not only reduction in water consumption but also addressing water pollution, enhancing water efficiency, recycling and reusing industrial water, investing in community water stewardship like pond adoption in villages, rainwater harvesting inside and outside organization’s premises, etc.

IMPACT OF WATER CRISIS ON CORPORATE:

The water scarcity in a region has a significant impact on the corporates operating in that region. Some of them are mentioned below:

• Operational Disruptions: Erratic water supplies affect the industrial operations and manufacturing processes leading to production delays. Also, lack of proper water supply results in disruption of Supply Chain and Logistics which in turn increase the cost of transportation and loss of revenue for businesses.
• Increased Cost: Organization’s are forced to invest in artificial water resources such as water tankers or borewells, to meet the water needs of the employees, resulting in higher operational expenses and decreased profitability.
• Company Reputation at Risk: Corporates may face scrutiny from government organizations, stakeholders, employees and investors regarding their water usage pattern, esg impact and their contributions to the water crisis.
• Employee Morale: Water scarcity affects the well being of the employees. Inadequate access to fresh water and sanitation facilities adversely affects the employees’ health which reduces their productivity in the workplace.

CORPORATE INITIATIVES TOWARDS WATER CRISIS:

Many companies in the developed and developing nations are proactively addressing the esg water crisis through innovative strategies and partnerships. Some of these initiatives are: 

• Water Conservation and Efficiency Measures: Implementing technologies and practices to reduce water consumption footprint and improve water efficiency in manufacturing and industrial processes through recycling and reuse of the process water. Using air cooled utilities such as compressors instead of water cooled so as to reduce the consumption of fresh water. Implementing various Rainwater Harvesting techniques to recharge ground water level.
• Wastewater Treatment and Reuse: Treating and Recycling wastewater to reduce freshwater withdrawal and minimize pollution of water bodies. This includes the addition of Effluent Treatment and Sewage Treatment facilities inside industry premises for better tracking of water consumption.
• Supply chain engagement: Collaborating and Sensitizing suppliers to assess and improve the water management practices throughout the supply chain, fostering transparency and accountability.
• Community Engagement and Investments: Supporting local communities through infrastructure projects such as pond development, rainwater harvesting pits, irrigation facilities, etc. Corporates can also run education programs under ESG activities to sensitize local communities on access to clean water and sanitation.
• Advocacy and Collaboration: Collaborating with industry peers, NGOs, ESG organizations, academia to advocate for policy reforms, investments in water infrastructure, and collective action to address the root causes of water scarcity.

BENGALURU WATER CRISIS: 

One of the most recent ones is the water scarcity that occurred in Bengaluru, India in April 2024. There are combinations of factors that led to this extreme conditions in the city and neighboring regions Some of them are:

• excess extraction of groundwater
• pollution of freshwater bodies
• rapid urbanization
• encroachments on lakes and water catchment areas
• inadequate infrastructure for water storage and distribution
• unsustainable water management system
• climate change resulting in delayed rains, etc.

As a result, businesses and residents face erratic water supply, depletion of groundwater levels and contamination of available water resources resulting in health, esg issues.

CASE STUDY – CORPORATE RESPONSIBILITY:

Coca Cola Water Stewardship program: Since Coca Cola is a beverage company, through its “REPLENISH” program, it has committed to replenishing all the freshwater it uses in its beverages and production processes by 2030. The company started investing in watershed projects, water replenishment projects, and community partnership to conserve and restore water resources.

Levi Strauss & Co. Water<Less: One of the major water consuming industries is a textile industry. Levi’s, being one of the leading firms in textile,has implemented several water saving techniques in its denim production. Through these initiatives around 96% of the water consumption is reduced in some of the products. The company is also engaging suppliers to implement sustainable water management techniques and collaborating with NGO’s to address water challenges in manufacturing industries.

INFOSYS: India’s one of the largest IT companies, headquartered in Bengaluru implemented various water management initiatives across its campuses including rainwater harvesting, water recycling and efficient irrigation system. After the recent Water Crisis that hit Bengaluru this year, Infosys is increasingly collaborating with NGOs and ESG local communities to replenish the freshwater sources, promote water literacy and create awareness about Water Conservation.

CONCLUSION:

With the continued climate change resulting in disruption of precipitation patterns, water scarcity and droughts is among the most critical challenges that the world is facing. Water crisis requires urgent attention and collective action from the World leaders, governments, civil societies, businesses, industries and corporations. By integrating water stewardship into the ESG roadmap and in their operations, supply chain management and corporate strategies, businesses can not only navigate water crises but can also mitigate future risks. In this way, the corporates can responsibly contribute to esg wellbeing.