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Are businesses taking water risk seriously?

Nathan Richardson | 23 Jul 2014 | Comments

The Financial Times has just published the first article in an investigative series looking at water scarcity[1]. It focussed on the financial risks to businesses from future changes in water availability and on how companies are increasingly having to address the issue to safegaurd their operations and to protect their brand. In the last three years companies including EDF, Coca Cola, Nestle, Ford and Rio Tinto have spent more that $84bn worldwide to improve the way they conserve, manage or obtain water according to data from Global Water Intelligence. Whilst the price of water may be cheap the cost of it not being available in the right place, in the right quantity, at the right time can be very significant.

Many of our clients are starting to recognise that the costs associated with water scarcity risks materialising can be high. A survey of over 500 of the top global companies (including many of our clients), undertaken on behalf of investors controlling £57 trillion of assets in those companies, was published last year and makes interesting reading. Over 70% of companies identified water as a substantive business risk with anticipated financial impacts from a single event as high as US$1billion[2].The table below shows the top three water risks identified in the survey by companies from different sectors.

However, although water risk is increasingly being recognised by businesses across a range of the sectors in which we operate, many of them still just have a short term focus on their own operational water efficiency. I am not saying this isn’t important, but I believe businesses need to consider water risk on a broader scale, looking at the catchments in which they operate, looking at their supply chain and looking at future risk and resilience. The last point is crucial if they are to take into account factors such as increasing population, urbanisation, climatic variability and resource availability. The importance of this is highlighted by a prediction that by 2025 two thirds of the world’s population will be living in water stressed countries (up from one third today).

I think companies need to be developing their awareness of water risks to inform their strategy, business plans, investments and their R&D, increasing their resilience and helping Future Proof their business. This is something Atkins can help with and I am leading an effort to promote how we can help corporate organisations address their water issues.

But what do you think? I am keen to hear from others within Atkins who see potential to help their clients address water risk. Leave a comment below or get in touch with me to let me know your thoughts.

Atkins Water Risk Table

[1] Financial Times 14 July 2014

http://www.ft.com/cms/s/2/8e42bdc8-0838-11e4-9afc-00144feab7de.html#slide0

[2] Carbon Disclosure Project. 2013. Moving beyond business as usual. A need for a step change in water risk management. CDP Global Water Report 2013. Carbon Disclosure Project, London​