In deep water

Water consumption in the global North continues to increase, and the UN predicts a 40% global gap in water supply by 2030 if current consumption and production patterns continue. Strategic water stewardship is seen as a prerequisite to maintaining water security in the future. Regulatory compliance and operational water efficiency management is not a viable water strategy anymore. Both are necessities when building approaches to water, however, it is the big picture, including the societal impacts of water in value chains, that needs to be addressed.

Water stewardship

Water stewardship is a framework and set of water-related practices that help businesses manage risks, cut costs and build trust while promoting long-term water security for all. According to the Alliance for Water Stewardship (AWS), water stewardship is a socially and culturally equitable, environmentally sustainable and economically beneficial use of water, achieved through a stakeholder inclusive process that includes both site- and catchment-based actions. Water stewardship is sustainable water management on the watershed level under consideration of related stakeholders as well as consideration of local factors influencing water-related risks.

Beyond water management

Taking a strategic approach brings a variety of benefits for companies, including a positive impact on company reputation through trust and collaboration within and between sectors, investors, local communities and governments. Water stewardship is an essential part of the social acceptability of any company's operations. It also helps to identify and implement better water use practices and decreases environmental impact. Losing sight of water issues may lead to diverse challenges and risks, including physical, regulatory, technological, and reputational as well as financial. In fact, 69% of listed equities reporting via the Carbon Disclosure Project (CDP) are exposed to water-related risks that could generate a substantive change in their business. The potential value at risk has been estimated to be as high as USD 225 billion. Reputational risks might affect financial performance as well.

Actions in assessing

As stated by the World Economic Forum, water is an impact multiplier for sustainability and is inextricably linked to climate change and degradation of ecosystems. All too often, water has been an underrated resource, and its benefits to ecosystems and society are underestimated. The financial sector increasingly recognises the need to understand water-related impacts and dependencies. Current projections of water stress suggest potential long-term growth rate declines due to water scarcity. Increasing water stress is intensified by the net-zero transition, which will amplify both risks and opportunities for investors. This requires business owners’ preparedness to respond to investors' enquiries as to water strategies and performance.

Different pathways

It is natural that corporates evolve from basic to more advanced water stewardship practices. On a high level, the corporate water stewardship journey is about understanding how essential water is to your business and identifying the water basins you impact and depend on. Based on this prioritisation, companies then create water stewardship plans and targets for their own operations, supply chain and the whole value chain, implement the plans and act collectively. Finally, actions are assessed and verified, and progress is communicated.

I have followed and taken part in the development of global water stewardship approaches for over ten years

, stated Suvi Sojamo, Leading Researcher at The Finnish Environmental Institute (SYKE). She continued:

The complexity of water issues and the plethora of tools and initiatives available can be confusing.

This is one of the reasons why AFRY Insights interviewed her about recommended actions.

SYKE has collaborated with research institutes, ministries, NGOs and businesses in establishing the Finnish Water Stewardship Commitment, an action framework helping companies to become the most responsible water stewards in the world by 2030. Each of its five steps is accompanied by best practice tools and guidelines.

The five steps include:

1. Identifying water risks and opportunities with a mapping exercise covering their global operations and value chains
2. Assessing the material water risks, opportunities and impacts
3. Integrating water into their strategy by defining key priorities, objectives, targets and actions
4. Collaborating with stakeholders to develop sustainable water use and governance
5. Monitoring and reporting on water stewardship progress in a transparent manner

When businesses get their water use and impacts right, building on a robust evidence base and open collaboration with stakeholders, they can become real change agents in a broader sustainability transformation.

Financial opportunity

The CDP report Riding the Wave, published just before the UN 2023 Water Conference in March, illustrates financial opportunities that exist for companies that integrate water into their business strategies. Water stewardship is no longer just a question of risk management but of real value ready to be captured. Water has become a topical issue in boardrooms, with major companies investing in new products and services to address the water challenge and seize market share in a world in which we will have to do more with less.

This article was authored by Minna Pirilä and Tanja Virtanen-Leppä.