Water And Relationships That Matter

By Matt Turner 21 April, 2010

Future 500’s Matt Turner tells us why water is likely the next “dominant big issue” of the 21st century.

China Water Risk interviews Future 500’s water director, Matt Turner, on just how progressive companies are getting on water…

That there is an emerging global water crisis is in little doubt. In a recent article, H20: Lots on Tap for the Next Big Issue, Matt Turner, Director of Future 500’s Global Stakeholder Initiatives and Water Programme states that there is broad consensus among stakeholders—governmental officials, academics, NGOs, foundations, socially responsible investment groups and business—that water is likely the next “dominant big issue” of the 21st century. And indeed, as an urgent sustainability issue, “Water is the next oil,” is fast becoming the view of water experts and NGOs alike. But as opposed to oil, there is no substitute for water.

Companies are increasing focus on the water issue but are still reticent to take rigorous, immediate action beyond their four walls and further down the value chain. “One of the most pressing gaps and limiting factors for more strategic policy and action hinges on the void of robust corporate disclosure of water risk and use,” says Turner. This is especially true for China, even in relation to the most basic level of disclosure. For example, in October 2009 Greenpeace revealed that 18 top Chinese and multinational companies failed to comply with China’s environmental disclosure law, effectively hiding their air and water pollution violations.

More recently in March 2010, Ma Jun, a leading environmental advocate in China and director of the Beijing-based Institute of Public and Environmental Affairs (IPE), turned the spotlight on 175 polluting companies listed on the Hong Kong Stock Exchange.  Disclosure of often recurring regulatory breaches was found to be as woeful as the companies’ environmental performance, at least as far as water pollution goes.

CWR: If there is a broad consensus on water being a key issue, why is there very little action among companies on water?

Matt: Maybe a better assumption would state that there is little public action taken among companies on water. At the moment, there is a big chasm with regard to how water is understood by companies and stakeholders. One major question is whether water is a basic human right or a commodity? Companies are divided on this issue—with some seeing it as an inherent right, some believing it’s a commodity, while others remain undecided (or perhaps view it through a rights based framework but not necessarily think water should be “free”). Sometimes disjointed positioning and rhetoric by governments and civil society have compounded this division. As a result many companies fearful of legal actions and other less than positive ramifications take a much more subdued approach with regard to publicly addressing the water issue. However, when you dive deeper with companies, you do learn that many understand how critical water is as a business issue and have taken impressive strides internally to measure, reduce and understand use and discharge. In the coming years, you will see a strong demand from stakeholder communities and a much broader willingness by companies to report and engage more publicly on water, including making formal declarations of water as a human right.

CWR: What will drive greater buy-in from companies on water?

Matt: For companies to have greater buy-in there has to be even more public attention funneled to water, certainly from progressive NGOs, which will in turn influence the media and individual consumers. With civil society and media focused on an issue, political will for governments to become more involved will foment. We’ve gone through this with the climate issue, but with water there is no substitute, and the issue is far less politically divisive.

While companies often have ample technical capacity to deal with water, the issue needs to gain greater traction among those responsible for corporate external policy and engagement. There is a need for greater consensus and more information sharing in terms of water use and stewardship among all actors at a local watershed level. However this level of collaboration needs to be conducted in a more open and integrated manner to break-through current silos dividing sectors and even departments at large companies, which hinder sustainable and scalable practices.

To this end, Future 500 is working with the Water Environment Federation to highlight best practices in joint water stewardship practices between leading companies and progressive public water utilities. In January, Future 500 also participated in a multi-stakeholder working group on water stewardship for Lake Tai, China’s third largest freshwater basin.

CWR: What can be done to address the gaps in corporate water disclosure?

Matt: In the absence of regulatory requirements, increased demands from shareholders, investors, and consumers will drive companies to report more on water use and discharge.  While a few companies have begun to disclose water-related information, we see increasing expectations for greater transparency from the socially responsible investor (SRI) community and even regulatory bodies in the US, such as the Securities and Exchanges Commission (SEC).

The CDP’s nascent Water Disclosure Project is one of the boldest and largest efforts going forward right now. The project aims to help institutional investors understand the risks and opportunities associated with water scarcity, by increasing the availability of high-quality information on this critical issue. The Water Footprint Network (WFN) is another initiative gaining critical momentum, and one that has captured the attention of both NGOs, academics and a broad coalition of companies. However, the methodology is still being refined and understood by stakeholders. While tangible frameworks and standards are at least 2-3 years off, within both these efforts and others, there is a realisation that the lack of data standards makes cross-industry and other reporting metrics very difficult to assess, leaving much open to interpretation.  While many companies have a foothold on reporting on water use and discharge at the facility level, it gets much more complex as you go down the supply chain.

The ultimate goal of Future 500’s water programme is to get diverse water stakeholders – water agencies, leading multi-national corporations from multiple sectors, environmentalists, foundations, public health and human rights groups, and community organisations – working together to improve water rights, access, infrastructure and transparency. To help achieve this goal, Future 500 participates in key fora—in the US, Europe and Asia—that bring various stakeholders together; work with leading voluntary initiatives like the Water Footprint Network, UN-Compact CEO Water Mandate, Alliance for Water Stewardship; and are instrumental in aligning corporate partners with local and international NGOs focused on fostering better water stewardship.  In short, you can say that we bring value by helping build relationships that matter and that might not otherwise happen without a connector.

CWR: Does the water challenge require the same solutions as the climate issue? How will it differ in terms of corporate engagement?

Matt: Water is a local issue, so you can’t approach it the same way as you would climate change. You can’t address water through a huge convening of governments, or by say, taking action in India to solve a problem in Indiana. Corporate engagement vis-à-vis water works in the same way. Companies are impacted at the facility level, based upon local water issues, such as scarcity, pollution, watershed dynamics, and the regulatory environment and community attitudes and needs.  Understanding these local dynamics for companies is key for them to maintain their social license to operate.