Is Water The New Bottom Line For The Private Sector?

24 March, 2015 / Articles

On December 11th, the U.S. Chamber of Commerce Foundation (USCCF) Corporate Citizenship Center will host The Energy-Water-Food Nexus: Risks and Opportunities for the Private Sector, the second in a series of roundtables based on a report released earlier this year. The USCCF’s report and surrounding events are highlighting success stories and, more importantly, opportunities for the business community to address the energy–water nexus: the idea that energy and water use are fundamentally intertwined. In order to accurately address water risks across operations and supply chains, businesses must take a more holistic look at their water and power usage.

The business world is quickly beginning to understand the intersection of these two sectors and the significant impact they have on business operations.

In the commercial, industrial, and institutional sectors, energy efficiency and other measures could save as much as 15-30 percent of water use without reducing operations. This is particularly important as businesses consider how they manage water risks in areas where they operate. The 2014 Carbon Disclosure Project Water Disclosure Global Report, conducted on behalf of 573 investors with assets of $60 trillion, reported that 68 percent of responding companies say water is a substantial risk to their businesses, but only 42 percent have publicly demonstrated a commitment to water efficiency. Interestingly, 43 percent of reporting businesses said that water stress and/or scarcity was a top risk driver versus 16 percent that said drought was a top risk driver. This indicates that companies are more focused on longer-term risk management, as opposed to reacting primarily to drought conditions and concerns about short-term profits.

Compounding issues

December’s roundtable is presented in partnership with Lockheed Martin LMT +0.08%, and will look at issues specific to three U.S. regions: the Western Rocky Mountains, the Great Plains, and the Gulf of Mexico. Participants will also hear from technical experts from the Sandia National Laboratory, which is at the forefront of cutting-edge research on nexus-based approaches to solve compounding issues in the western United States.

Every respondent in the energy and utility sectors reported that water poses a substantive risk to their business, both now and in the future. And almost two-thirds of respondents in each sector have already experienced detrimental impacts related to water in the past five years. In the 2013 CDP report, Brown-Forman , one of the survey respondents, stressed that “water supplies could impact the electric utilities that provide us electricity. Potential curtailments and utility cost increases due to inadequate cooling water for power generation present a potential financial risk to our company in terms of increased electrical costs.”

Another compounding problem for a lot of businesses is how to account for costs and savings across their operations, especially when companies work in regions across the country or globe. Water is not perfectly replaceable and consumption cannot be compared on an apples-to-apples basis. For instance, water withdrawn in an arid, urban area does not have the same impact to its environment as when water is withdrawn in a rural, wet region. It’s important for companies to accurately understand and measure their impact on the local environment.

Leading practices

The Chamber Foundation report, a focal point for the roundtable discussion, highlights some case studies of companies making efforts to tackle the energy-water nexus impacts on their businesses. Some highlights include:

American Water installed the largest ground-mounted solar electric system in New Jersey at one of its water treatment plants, which supplements 20 percent of the peak power needed to run the plant

Dow Chemical DOW -0.38% created a public-private partnership to establish a water recycling program that generates steam to power its manufacturing plants

General Motors set up a robust, measurable energy efficiency program that has reduced energy intensity by 11 percent compared to its 2010 baseline

MillerCoors introduced a smart irrigation system and a Showcase Barley Farm to demonstrate best practices to other farmers

In addition, AT&T, collaborating with EDF to reduce water impacts from its operations, has worked to optimize building cooling systems across its portfolio to reduce water use. Through this and other efforts, the amount of water AT&T uses to run its network has decreased from 105 gallons per terabyte of network traffic in 2010 to 48 gallons in 2013—a drop of almost 54 percent. In addition, through a multi-year collaboration, AT&T and EDF developed a Water Efficiency Toolkit that distills the best practices identified through our work into a set of tools any organization can use to reduce their building water use.

These are just a few of the initiatives companies are employing to address the challenge of constrained power and water resources that are facing them now and into the future. But there is still much work that needs to be done by both the water and the electricity sectors, which rely on each other but do not fully consider the lifecycle costs of the other sector’s resource.

The Chamber Foundation’s roundtable series will help bring together experts to tackle the commercial sector’s challenges. This “convening of the minds” will also help companies get the information and resources they need to reduce their impacts, curb costs, and mitigate risks to their own operations.

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