Water Scarcity Poses Threat to Global Business

Growing Threat of Water Scarcity and Pollution Creates Serious Risks

Businesses around the world, from beverage companies to chip manufacturers, are failing to prepare for the serious economic and political risks posed by growing competition for fresh water, the threat of water contamination, and rising water-related costs. These risks can lead to plant closures, supply-chain disruptions, and public opposition to local business activities.

That's the message of a new research paper by the Pacific Institute, a leading nonpartisan research institute based in Oakland, Calif. The report identifies a range of worrisome trends that impact businesses in almost every sector, and recommends steps that companies can take to meet these challenges head on.

"Water scarcity and other water-related issues already pose a serious threat to many businesses around the world," said Jason Morrison, Director of the Pacific Institute's Economic Globalization and the Environment Program, and lead author of the report. "There are solutions, but unless companies start taking steps to protect themselves and protect water resources, they could find their operations in jeopardy."

The study, Freshwater Resources: Managing the Risks Facing the Private Sector, outlines a range of problematic trends: Growing water scarcity in the face of skyrocketing demand and increasing competition; community concerns about industrial water use and pollution; and potential changes in water availability and quality stemming from climate change. Severe water shortages can lead to supply chain interruptions, poor product quality, and even loss of license to operate. Already, local governments have forced some multinational companies to close major factories due to concerns about the impacts of their water use.

"The report makes clear that to be responsible stewards of shareholder resources, companies must become more responsible stewards of water resources," explained Steve Lippman, Senior Social Research Analyst from Trillium Asset Management Corporation.

"The good news for businesses," continued Arvin Ganesan, Associate Social Research Analyst from Calvert Group, Ltd, "is that there are a range of steps they can take to protect themselves while helping protect these key resources for the future."

The report recommends ten steps companies can take to reduce their water-related impacts on the environment and local communities, and help protect their operations and their shareholders from business risks related to water. These steps include measuring their current water use; establishing a water policy with specific goals and performance targets; improving water efficiency and conservation efforts; and engaging suppliers, community groups, and outside partners in an open dialogue on the issue.

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Organization Information

Based in Oakland, California, The Pacific Institute (www.pacinst.org) is an independent, nonpartisan think-tank studying issues at the intersection of development, environment, and security.

Boston-based Trillium Asset Management Corporation (www.trilliuminvest.com) is the oldest and largest U.S. investment management firm dedicated solely to socially responsible investing. Two years ago, Trillium Asset Management filed one of the first shareholder resolutions raising the issue of the business risks of water scarcity.

Originally released: August 23, 2004