Water is a human basic need, just like food, shelter, and clothing, and without it we can’t survive. Water scarcity already affects almost every continent and more than 40% of people on our planet. It will become the most important sustainability challenge of this century. Find out more.

How much water we need

The United Nations suggests that every person needs 20-50 litres of water per day to ensure their basic needs for drinking, cooking and cleaning. Today 780 million people lack access to clean water sources, 1.4 billion people live in river basins where water use exceeds inflow, and 2.5 billion people live without basic sanitation. By 2025, 1.8 billion people will be living in countries or regions with absolute water scarcity, and two-thirds of the world’s population could be living under water stressed conditions. 

What companies are doing

About 20% of freshwater use in the world is attributed to industry, while about 70% is used for irrigation and the remaining 10 per cent is for domestic use. Companies with good water management strategies can therefore contribute substantially to the reduction of freshwater use.

Whilst several studies claim that the most water-intensive industries do not frequently commit to water targets, the CDP Water Disclosure’s latest report states that the number of companies recognising water-related risks is growing, and that the percentage of companies with concrete water-related goals and targets has increased from 55% in 2012 to 63% in 2013. However it also reports that most companies have a narrow focus on reducing their water use or increasing water recycling.

One company that has experienced water-related business impacts is Diageo, a British beverages company. It has water shortages at two of its facilities in Ghana, which has directly impacted the company’s ability to produce and ship its product.

What Triodos Sustainability Research is doing

Water management programmes have been part of the Triodos Research screening process for quite some time. However, unless a company was involved in serious controversies related to access to water, the lack of programmes did not lead to exclusion. The lack of current pro-active company behaviour has motivated Triodos to develop a minimum standard for this topic. Although all manufacturing industries use water, we will introduce this minimum standard only for those industries that have the highest water intensity – industries such as utilities, materials, and food & beverages. We will focus at a company’s general water management programmes and targets. One example we have already seen is chemicals company Akzo Nobel, which has set a target for 100% sustainable freshwater management at all production sites by 2015.

In future, we expect to further refine our standard to have specific requirements for different industries. We will also not only be looking at company’s own production but will also analyse a company’s supply chain management. For example, food & beverage companies may use 70 liters of water to produce a 1 liter bottle. 80% of this water use is for growing agricultural raw materials. Any efforts to reduce water use in the supply chain will therefore have far more impact than a programme to reduce water used in the production plants. 

Note: The issues explored in this article are relevant for sustainable investments on the stock market. Triodos Bank believes that our socially responsible investments are a powerful means of promoting our values and working for greater sustainability, while enabling us to offer a complete range of attractive investment options to customers who choose to invest on the stock market.