Water Risk In The ICT Sector
By Sarah Wade 26 May, 2021
AWS with RBA & WWF analysed >3,000 ICT sector locations to find out where the real risks are. Their Wade shares the findings
Eighty per cent of Information and Communication Technology (ICT) supply chain locations face high to very high levels of water risk due to flooding, and 68 per cent face high to very high levels of risk due to water quality.
These are the headline findings of our new report Water Risk in the ICT Sector: The Case for Action, which examines the water risks faced by the ICT sector and sets out practical steps for collaboration and response.
ICT is one of our four priority business sectors at the Alliance for Water Stewardship. As a highly diverse set of businesses, covering many different types of companies all over the world, water risks vary greatly within this sector. In 2020, our global ICT Water Stewardship Working Group agreed that an important step in helping this sector respond to water-related risks and opportunities was to help articulate what water risk looks like in the ICT Sector.
China’s Taihu, Dong & Zhu river basins identified as significant with the largest cluster of ICT supply chain facilities
Together with the Responsible Business Alliance (RBA) and WWF, we decided to undertake some desk research to create a general picture of water risk in ICT supply chains. By running more than 3,000 ICT sector locations through the WWF Water Risk Filter tool, we identified the Taihu, Dong and Zhu river basins in China as significant, with the largest cluster of ICT supply chain facilities. Other at-risk river basins included the Danube and Rhine in Europe, and the Colorado and Upper Mississippi in the US.
Our findings highlight the significant risk water poses to business continuity and supply chain resilience, but it also demonstrates that many of the risks are found in the supply chain, outside of the direct control of many brands.
Many of the risks found are in the supply chain
In fact, due to the highly interconnected nature of supply chains, with many national and multi-national brands all sourcing from the same suppliers, there needs to be a coordinated response that goes beyond any one company’s own operations.
In Asia, many business clusters are located downstream & close to coastal regions = risk of flooding significantly elevated
The types of risks in the report were not quite what we expected to find. Flooding in particular was a surprise: even the most advanced businesses tend to focus on scarcity and pollution within their stewardship actions, not flooding, but scarcity was only identified as a medium to high risk for 15 per cent of sites assessed. In Asia, many business clusters are located downstream in major basins, and close to coastal regions, meaning that the risk of flooding is significantly elevated. Degraded ecosystems and reputational risks are also cited as other major challenges facing the sector.
But it isn’t just about risks, there are also opportunities to consider.
Water stewardship is an approach that enables a business to develop a deeper understanding of its unique water-related impacts and dependencies within its local context. The AWS definition of water stewardship, is: “the use of water that is socially and culturally equitable, environmentally sustainable and economically beneficial, achieved through a stakeholder-inclusive process that includes both site- and catchment-based actions.”
When it comes to the ICT sector in particular, there is an opportunity for a shared view of water risk and opportunity, with a consistent response that can be used throughout the industry, to maximize benefits for all.
If the ICT sector takes action to reduce water impacts, it creates a ripple through effect for other businesses
Many other industries also rely on the ICT sector for products and services to help them undertake their own business activities. As a result, if the ICT sector takes action to reduce water impacts, it creates a ripple through effect for other businesses, who will benefit from lower impacts within their own ICT-related supply chain.
In the report we set out practical areas in which ICT businesses could collaborate to help establish the sector as a water stewardship leader. To get started, ICT businesses should:
- Assess for impacts and dependencies on water across the value chain, using techniques such as water footprinting or Life Cycle Assessments to help establish a focus for water stewardship within the business.
- Understand the internal water context by completing an operational risk assessment to identify the unique level of exposure that operational locations have in relation to the external water context.
- Understand the external water context by completing a basin risk assessment to identify external water-related risks.
- Enable water stewardship within the value chain: Encourage those in the value chain to: (1) measure and report water use (quantity and quality) through common platforms, (2) understand the link between water, energy and chemicals, (3) understand water context & risk exposure and (4) adopt and implement the International Water Stewardship Standard (AWS Standard).
- Learn from others and collaborate: Participate in dialogues with industry peers and water experts to share knowledge and good practices to accelerate learning and adoption of water stewardship.
I look forward to continuing to work with the ICT sector to help more companies take the next step in water stewardship. There are great opportunities to rapidly scale-up action and create shared value across the supply chain through using the AWS Standard as a common language and a collaborative approach to water stewardship.
Over the course of 2021, we will continue to work with the ICT Water Stewardship Working Group to identify more opportunities to reduce the barriers to water stewardship in the ICT sector and encourage collaboration in key sourcing hot spots around the world.
Find out more about the Alliance for Water Stewardship and the ICT Sector.
- Can TSMC & Taiwan Manage Water To Save Global Electronics? – Taiwan’s water & climate risks plus lacklustre government actions mean the electronics sector faces significant clustered risk, warns CWR’s Dharisha Mirando
- Green Clouds One Day – How does watching online videos exacerbate our climate crisis? Are big tech brands like BAT and FAAG doing enough to source more renewable energy? CWR’s Chan reviews the landscape – it looks like we will see “green clouds” one day
- The CWR Survival Guides to Avoiding Atlantis – Sea levels can be 3m by 2100, putting urban real estate equivalent to 22 Singapores underwater in just 20 APAC capitals & cities. With US$5.7trn of annual GDP at stake, get on top of the new risk landscape to survive
- Surviving Rising Seas – 20 APAC Cities: Who’s ahead & Who’s Behind? – The homes of 28mn to 100mn+ residents could be submerged in just 20 APAC cities. Which cities are more prepared? We walk you through the Top 5 Most Proactive & the Bottom 5 Laggards in our CWR APACCT 20 Index
- Sovereigns At Risk: Lots Of Capital In Vulnerable Spots – Clustered nature of rising coastal threats plus lax govt action put APAC sovereigns at risk. CWR’s analysis of GDP, trade, markets & bank loans reveal intense concentration of risks. As no-sense strategies pervade, see who’s in CWR’s watchlist
More on Latest
- 3 Reasons Why APAC Banks Must De-risk Now – CWR’s Dharisha Mirando explains why APAC banks must lead & de-risk, plus she catches you up on the latest new stats from science and finance, so you won’t be blindsided
- How Water Risks Will Impact Credit Ratings – Water risks are relevant for a wide variety of sectors & asset classes yet, incorporating them in credit rating decisions is difficult. Fitch Ratings’ Justin Sloggett shares what to do
- A Wave Of Change: Companies’ Role In Building A Water-secure World – Despite the pandemic, companies disclosing to CDP are up 20%. Their Laureen Missaire shares the latest trends from their 2020 global water report
- TCFD Support: Identifying Cheap Talk & Cherry Picking – TCFD is championed by many as the gold standard of disclosure. But is it truly effective? Julia Anna Bingler, Mathias Kraus & Markus Leippold, together with the help from ClimateBert, say no
- Adapting To Climate Change – Like it or not, climate impacts are getting increasingly ‘up close & personal’ yet, adaptation finance is lagging. Banks & investors should get on top of it as it makes business sense, suggest BNP’s Chaoni Huang & Jonathan Ho
Read more from Sarah Wade →