Know your water risks
Water disclosure project to help companies reduce supply chain risks
TORONTO―While most industrial processes rely on water somewhere along the line, nearly half of all companies aren’t aware of supplier-related risks, according to a new global study.
The Carbon Disclosure Project (CDP) Water Disclosure surveyed more than 300 companies across sectors ranging from mining to manufacturing.
More of them are making water a priority―89 per cent have formed water-related policies and strategies and 60 per cent have developed performance targets.
But most still have a lot of work to do when it comes to identifying water threats in their supply chains. And that knowledge is crucial to assessing their own business risk, says Anthony Watanabe, founder of the Innovolve Group, a sustainable investment organization.
“We think we’re water-rich here in Canada but we’re actually sourcing water throughout our supply chains from different regions in the world,” Watanabe says.
He says manufacturers especially should be thinking about what would happen if water became scarce in a region they depend on for imports, such as the U.S. or Asia.
“It could lead to anything from price increases to disruptions in the delivery and manufacturing of supplies,” he says.
Companies can start by mapping out their supply chains at least once a year.
“Get a sense of where your suppliers are operating and if those regions are subject to shortages,” Watanabe advises.
One respondent, a U.S.-based utility, said it routinely asks suppliers about their water conservation programmes when issuing requests for proposals.
Businesses can also work with suppliers and other stakeholders to promote water management and R&D.
Another risk guard is to start pricing water into capital expenditure programs by assessing the current and future costs of withdrawls.
It also means taking a closer look at internal operations.
“At the plant level, companies can start by identifying the water quality and quantity they need for their products and processes,” Watanabe says.
By measuring their own water use, companies can cut back on both risks and costs.
“It can actually set off some ‘ahas’ and help them find ways to reduce or reuse water,” Watanabe says.
Molson Coors improved its bottom line by reexamining how it was using water.
At its Mississauga, Ont. brewery, Molson switched from splash nozels to spray nozels to clean its large vats where beer is fermented.
The new method not only saved water and money, but got the vats cleaned more quickly, cutting down production time.
The brewer also partnered with suppliers to restore watersheds in areas they’ve identified as vulnerable to water scarcity.
“Companies are realizing there are water risks, but the flip side is there are also opportunities for cost savings and reputation,” Watanabe says.
The CDP and the Innovolve Group will discuss water management, risks and opportunities at its upcoming Canadian Water Summit in Toronto on June 14.