Pacific Institute Insights

Do Businesses in the U.S. Have an Enlightened Self-Interest in Sustainable Water Management?

By Jason Morrison, Corporate Sustainability Program Director

April 8, 2014

Water challenges are not just an issue for companies with operations and/or suppliers in developing countries; they are confronting businesses here and now in the United States. And while the current drought in California and the Southwest or the one in the Midwest last year get considerable attention, many regions in the US face a chronic imbalance between water supply and demand. These regional imbalances, coupled with a variety of other water-related concerns nationally, present current and future water risks for US business.

looming-water-challenges-infographicThis of one of the key findings of a new study released by the Pacific Institute and VOX Global, titled “Bridging Concern and Action: Are US Companies Prepared for Looming Water Challenges?” Based on a survey of over 50 companies, it reveals that most of participating companies believe water challenges will significantly worsen in the next five years. More specifically, 60% of companies indicate water is poised to affect business growth and profitability within five years, and more than 80% say it will affect their decisions on where to locate facilities. This is a stark increase from only five years ago, when water issues affected business growth and profitability for less than 20% of the responding companies (see infographic).

However, the majority of companies surveyed do not appear to be planning corollary increases in the breadth and scale of their water risk management practices. In fact, nearly 70 percent of responding companies said their current level of investment in water management is sufficient. It is for this reason that the study’s authors question whether many companies are adequately prepared for the growing number of water risks and challenges they will face. Businesses participating in the study identified two significant internal obstacles that hinder greater companywide action on water: lack of time to raise awareness and buy-in and that other risks ranked as a higher, more immediate priority.

That said, the acknowledgement among major U.S. corporations that water is becoming major business issue is a notable finding in and of itself. There is growing recognition that in addition to being a significant societal problem, water also creates critical challenges for businesses specifically.  Insufficient or contaminated water supply, or a lack of infrastructure to reliably deliver that supply, can mean companies may not be able to maintain the volume and quality of their production. This new reality necessitates that companies’ senior management better understand the many ways that water affects their bottom line and that they pursue water stewardship strategies that adequately address these emerging water-related challenges.

The Pacific Institute has long held that sustainable water management is the most viable long-term water risk mitigation strategy that businesses can pursue. In sum, there’s a business case for bringing long-term water demand into alignment with renewable supply, and for engaging in democratic water governance processes geared toward ensuring that societal needs are equitably met and that aquatic ecosystems continue to function and thrive. It would be great to have more allies from the business community that share an interest in progressing toward the aspirational objective of sustainable water management here in the United States.

Pacific Institute Insights is the staff blog of the Pacific Institute, one of the world’s leading nonprofit research groups on sustainable and equitable management of natural resources. For more about what we do, click here. The views and opinions expressed in these blogs are those of the authors and do not necessarily reflect an official policy or position of the Pacific Institute.

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