Why do we look at water scarcity?
Water sources are endangered as a result of climate change and human activity. Agriculture (70%) and industry (20%) use the vast majority of freshwater worldwide; the remainder is household consumption. Therefore, it is a good reason for the agricultural sector and industrial companies to manage their water sensibly.
Seventeen hundred litres of water are needed to produce the average chocolate bar. To produce the average cup of coffee it takes 130 litres, and 2,500 litres of water are needed to produce one kilo of rice (waterfootprint.org). These products are often produced in countries where water is not abundant. Consequently, since 2014, Triodos Bank has been asking listed companies to observe conservative water management practices.
Awareness of water scarcity
The first step to addressing water scarcity is better awareness. Only 2% of your total water consumption comes out of the tap. The vast majority of your water footprint lies in the products you buy. Manufacturing a cotton T-shirt takes as much water as 55 showers and meat production is also a major consumer (www.nudge.nl).
Companies have a major responsibility towards the local community in ensuring that citizens have access to clean drinking water.
The products we buy are the biggest consumers, so it is all the more important to monitor industrial water management. “Freshwater scarcity is an increasingly serious problem,” says Rosl Veltmeijer of Triodos Research. “Companies have a major responsibility towards the local community in ensuring that citizens have access to clean drinking water. Moreover, their own production is jeopardised when no fresh water is available.”
In 2014 to counter water scarcity, Triodos Research set minimum requirements with regard to water consumption for companies operating in sectors with above-average water consumption. Triodos Research demands, for example, that food companies that are major water consumers actively contribute to sustainable water management.
Setting consumption targets and developing good water management policy are good examples. “Companies can organise their production process so that they use as little fresh water as possible,” explains Veltmeijer. For example, the carpet producer Interface has introduced a closed water system at its Dutch plant in which the production process water is used over and over again and no more fresh water is needed at all. AkzoNobel is another example: The company’s objective for 2015 was to introduce a 100% sustainable water management system in all its factories.”
International Year of Soils
Since 2015 was the international year of soils, the aim of the United Nations was to draw attention to the necessity of investing in healthy soils for the future. In addition to topics such as land grabbing and biodiversity, water scarcity also merits attention. A healthy, fertile soil contains sufficient water.
More initiatives
The Sustainable Agriculture Initiative and the United Nations Global Compact’s CEO Water Mandate are two sector initiatives promoting water management. The Dutch beer brewer, Heineken, has registered with both. Ninety-five per cent of Heineken drinks consist of water. Growing the crops, brewing the beer and cleaning entail a great deal of water consumption. Heineken has promised to reduce its water consumption in all these areas. A water management strategy has also been put in place that identifies and protects locations in dry areas. The objective is to influence water consumption in the agricultural chain.
Water footprint
As a company, it is possible to make a water footprint to measure how much water is used for each product. The American coffee roaster, Keurig Green Mountain, recently carried out such an evaluation of its entire chain. The company came to conclusion that the vast majority of its water footprint consists of rainwater used for growing coffee beans.
Keurig Green Mountain is one of the few companies offering financial incentives to growers to improve their water management. The company also aims to involve one million people in its supply chain in order to improve their living standards, including water safety and climate resilience. In addition, the coffee company is developing projects in North America to restore the balance between the use of water for nature and its use for the community.
Water management strategy
Finally, Triodos Research cites Coca-Cola Hellenic Bottling Company as an example. CCHBC has implemented a water management strategy to ensure that water is used as efficiently as possible. It recycles water during the production process and protects areas where water flows. CCHBC also prevents water polluting activities and protects sea life. The company has instigated cleaning campaigns and recycling projects.
The year of soils was therefore the moment to draw attention to water scarcity since healthy soil is closely tied to the supply of clean water. For the past two years, Triodos Research has been addressing this theme and encouraging companies to better understand their water footprint and, with that knowledge, implement a good water management system.
For an overview of our engagement activities and how we influence the companies we invest in, please visit our socially responsible investing page.