Emilio Tenuta, Vice President, Corporate Sustainability At Ecolab
One of the defining traits of technology companies is their relentless focus on the future and willingness to make big bets to ensure their continued success. Beyond artificial intelligence, robotics and machine learning, there’s another major development on the horizon that the tech industry is eyeing: water scarcity.
According to the United Nations, we are set to experience a 40 percent shortfall in water supply by 2030. Global demand for water is increasing as populations grow, economies expand and competition for water resources intensifies. In other words, water scarcity is the new normal, a prospect that will have deep repercussions across industries.
For example, consider data centers that power the world’s internet and computing needs. The massive amount of water they use to cool their servers means the risk to their operations will rise as water becomes scarcer both in terms of quantity and quality. Leading technology companies understand the value of water to their business and are taking steps to reduce water-related risks–but most companies aren’t as far along in planning for this new reality.
To better understand how large businesses are addressing water risk, Ecolab recently partnered with GreenBiz, a research consultancy, to survey leaders in a range of industries. Our goal was to better understand the gap between water use reduction goals set by the C-suite and actions taken to support water reduction and stewardship by frontline operators.
The survey included responses from 184 companies with annual revenues of $1 billion or more. The survey respondents represent varying sectors, the majority from consumer-packaged goods (CPG), basic materials, industrial, healthcare, technology and retail. Responders also represent a range of roles, including senior leadership, facilities, sustainability, EH&S and operations.
So, what did the results show?
First, water is clearly an increasing priority for companies. In the survey, companies ranked water risk higher in importance than climate change, waste and other natural resource risks, second only to energy. In the tech sector, water scarcity rises to the top as the biggest natural resource risk.
Leading technology companies understand the value of water to their business and are taking steps to reduce water-related risks
Overall, 75 percent of companies say they support their water priority through targets relating to water reduction, reuse and wastewater management.
However, there is a disconnect between the ambitious water reduction goals companies set and the support they provide to achieve their targets. While water-related targets are increasingly becoming part of high-level company strategies, integrating water into decision-making at the facility level is lagging.
For example, 82 percent of companies are not using advanced tools, such as analytics technology that can assess data to create actionable insights, and 44 percent agree they could use more advanced measurement tools and strategies. In addition, most companies say they do not provide incentives and tools that look beyond operating expenditures to build the business case for water-related projects.
What’s keeping companies from supporting their water-related targets and strategic initiatives through more informed water management and tracking? According to a World Business Council for Sustainable Development (WBCSD) report, there are four main barriers, including mismatched regulation and incentives, lack of resources, lack of awareness and the need for dialogue.
Companies can overcome the third barrier, lack of awareness, by collecting, analyzing and presenting data on real water use and the true costs of that water. Public tools, like the Water Risk Monetizer, enable financial modeling at the site level to provide actionable information. The Water Risk Monetizer uses local water basin datasets, economic techniques and scientific methodologies to monetize water-related business risks. The tool quantifies the full value of incoming and outgoing water to a specific location based on basin-level quantity and quality considerations. Risk levels for individual facilities are displayed in comparison to current water costs.
Linking Water Risk to Materiality
Demonstrating the materiality of water risk is especially important for a water-intensive sector or company. For example, a 15-megawatt data center can use up to 360,000 gallons of water daily–larger facilities can use more than a million gallons every day, making them uniquely vulnerable to water scarcity.
Beyond operational and sustainability concerns, technology companies are also dealing with increased regulatory scrutiny and reputational risk over water use, particularly in water-stressed areas.
While the technology sector recognizes water scarcity as their biggest natural resource risk, they lag in disclosing data with 70 percent of technology companies choosing not to disclose their water use. Disclosure is of course essential to setting and charting progress against water reduction goals and increasingly is expected of well-managed companies.
Data-driven Progress and Targets is the Way Forward
With 43 percent of companies in the Ecolab/Greenbiz survey agreeing with the statement, “Over the next three years, my company will likely actively take steps to better manage water,” it’s clear that a substantial number of companies understand the need for improved water risk management. By committing to water targets, disclosing water use and progress against targets, supported by data-driven insights, companies from all sectors can use water more efficiently and preserve their ability to grow.