Business Water Risk, Policy Engagement, and Collective Action

Jason MorrisonUN-Water “Furthering Water Cooperation” Conference

Zaragoza, SpainJanuary 9, 2013

The CEO Water Mandate: Purpose

Launched in 2007 in a partnership between companies and the UN Global Compact, the CEO Water Mandate is a business initiative dedicated to advancing corporate water stewardship.

Function 1. The Mandate constitutes a call-to-action for companies to proactively

advance their water stewardship practices

2. It also provides a strategic framework, research, guidance, and tools designed to help guide this process

Values and AssumptionsWater crisis is increasingly a business issueComprehensive sustainability strategies will be neededSound implementation can benefit business and societiesCollective action will be necessary

SE Asia Workshops

The CEO Water Mandate: MilestonesTotal Number of Endorsers

Disclosure Policy

SG Davos Water Speech

Letter to the G8

Stockholm Conference

Launch

Endorser Survey

Stockholm Conference

Water Disclosure 2.0

New York Conference

Stockholm Seminar

Policy Engagement Guide

Q4 Q3Q2Q1Q4Q3Q2Q1Q3Q2Q1Q4Q3

Stockholm Conference

Istanbul Conference

Transparency Framework

S. Africa Conference

Q4

Investor Action

Constitution

Joins UN-Water

White Paper: Climate and Water

Copenhagen Conference

Q2Q1

0

20

40

60

80

100

White Paper: Human Right to Water

20122011201020092008

Inaugural Conference

Rio+20 Conference

Marseille Conference

Q2Q1

2007

Q3Q2 Q4

Online Capacity Platform & Website

Corporate Water Accounting

CEO Water Mandate Workstreams

The Mandate’s current activities generally work to advance three specific components of corporate water stewardship:

• Human Rights: Understanding and exploring corporate responsibilities and practices related to the human right to water and sanitation.

• Disclosure: Encouraging meaningful, harmonized water-related reporting, while reducing corporate reporting burden.

• Collective Action: Facilitating cross-sectoral partnerships between businesses and others that address shared risk and drive more sustainable water management.

Water-related Risk in the Value Chain

Source: Treating Water, April 2, 2009, Robeco in collaboration with WRI

How Do Water Challenges Affect Businesses

• Operational crises resulting from inadequate water availability or management capacity

• Damaged social and legal license to operate in a specific location

• Diminished brand value due to irresponsible or unsustainable behavior

• Increased operational costs spent complying with relevant regulations, or for more expensive water and/or wastewater treatment

• Lower investor confidence due to unstable or uncertain water availability and related management plans

Water Risk: Drivers and Influence

Company- Water use efficiency- Wastewater treatment- Compliance- Impacts on communities and ecosystems

Basin / Watershed- Water stress- Water pollution- Inadequate infrastructure- Lack of government capacity- Climate change- Lack of community access to safe drinking water

Often, the greatest risks come from conditions over which the company has the least influence

Shared Risk

Unsustainable water

conditions

Business risk• Disruptions to water

supply for production• High cost of pre-

treatment• Perceived as

contributing to watershed challenges

• New regulations / requirements

Government risk• Not enough water to

fuel economy• Basic human needs

not met

Community risk• No access to safe

drinking water• Not enough water to

maintain livelihoods• Susceptible to extreme

weather events• Reduced ecosystem

services

Civil society risk• Reduced biodiversity /

damaged habitat• Depletion of natural

resources• Sustained poverty

Corporate water management initiatives that involve interaction with government entities, local communities, and/or civil society organizations with the goal of advancing:

1. Responsible internal company management of water resources within direct operations and supply chains in line with policy imperatives,

2. The sustainable and equitable management of the catchment in which companies and their suppliers operate.

What is policy engagement?

Business Case: Internal versus External Action

Example: Intel treats municipal wastewater in Arizona

Intel teamed up with the City of Chandler to devise a collaborative approach to water management that includes building an advanced reverse osmosis facility to treat clean rinse-water from Intel’s manufacturing facility to drinking water standards before being returned to the municipal groundwater source.

Intel established an agreement with the local water authority to reclaim millions of gallons of processed wastewater for:• the company’s cooling towers• air abatement equipment• onsite landscaping, and • irrigation for nearby farmland

Collective ActionShared risk creates a strong risk for collective action among companies and others to advance sustainable water management

Benefits• Mitigates business risks in robust manner• Leverages collective strengths , resulting in more

informed, better designed, and more durable outcomes

• Builds legitimacy with stakeholders

Risks & Challenges• Exposes a company to a complex landscape of

needs, interests, personalities, and organizational structures

• Requires development of new skills, a nuanced view of the company’s productivity framework, and enhanced capabilities to collaborate

Collective Action Preparation and Implementation

ELEMENT 4: Preparing for Collective Action

(Section 4.4)

ELEMENT 3: Selecting a Collective Action Level of Engagement

(Section 4.3)

ELEMENT 1: Articulating Water-

Related Challenges and Action Areas

(Section 4.1)

ELEMENT 2: Characterizing the

Interested Party Landscape

(Section 4.2)

ELEMENT 5: Implementation, Refinement, and Evolution

(Section 5)

Water-Related Challenges

Water Over-Allocation

Water Supply/Sanitation

Unreliable/Unavailable

Water Quality Deterioration

Flood Damage

Ecosystem Degradation

Water Management

System

CompanyInterests

Insufficient response to water management pressures and requirements

Direct operational impacts or concerned community actors or customers

Infrastructure Management and Funding

Water Governance and

Regulation

Water Planning, Management,

and Pricing

Physical Risk

Regulatory Risk

Reputational Risk

Stewardship Opportunity

Drivers of Water Resource

State

Changes to quality, quantity, or availability; alterations to goals or objectives

Economic Development

Demographic Shifts

Climate Variability

Social Norms and

Expectations

Characterizing Water-Related Challenges, Causes, and Risks

Potential Collective Action Areasfrom the Water Action Hub

• Efficient Water Use• Effluent Management, Wastewater

Reclamation, Reuse• Community-Level Access to Safe

Water, Sanitation, and Hygiene• Storm Water Management and

Flood Control• Infrastructure Finance,

Development, Operation, or Maintenance

• Sustainable Agriculture

• Climate Change Adaptation and Resilience

• Ecosystem, Source Water Protection, Restoration

• Monitoring and Knowledge Sharing• Engaging in Participatory Platforms• Public Awareness and Education• Improved Water Governance, Policy

Development, and Implementation

Inadequate Infrastructure System

Poor Catchment Governance

Ineffective Water Management

Water Over-

Allocation

Water Supply

Unreliable

Water Quality

Deterioration

Flood Damage

Ecosystem Degradation

Efficient Water UseEffluent

Management/ Wastewater

Reclamation/Reuse

Community Level Access to Safe Water, Sanitation, and Hygiene

(WASH)

Storm Water Management and Flood Control

Infrastructure Finance, Development, Operation, or Maintenance

Sustainable Agriculture

Climate Change Adaptation and Resilience

Ecosystem/Source Water Protection/Restoration

Monitoring and Knowledge Sharing

Engaging in Participatory Platforms

Public Awareness and Education

Improved Water Governance and Policy Development

Connecting Actions to Underlying Causes

Jason MorrisonPacific Institute

www.pacinst.orgjmorrison@pacinst.org

Learn more about the CEO Water Mandate and sign up for our mailing list at:

www.ceowatermandate.org