Reducing water footprints is an environmental challenge food and beverage companies should be prepared to meet if they want to maintain their competitive position and build reputation among end consumers, according to an analyst.
“Everyone has heard of carbon footprinting, measuring the amount of carbon generated by a product. But water footprinting is perhaps an even bigger challenge for consumer goods companies – particularly those working in the food and drink sector,” Sarah Boumphrey, head of countries and consumers at Euromonitor International, wrote on the company’s blog .
“Consumer goods companies, over-reliant on water, in water-stressed locales are at particular risk from competition for supplies and political risk. Added to which, with consumer demands for sustainability and transparency ever increasing they face pressure from end users as well as with supplies,” she said.
Assessing water footprints
Nicolas Franke, project officer at Water Footprint Network, said that companies are interested in seeing the water footprint of their products.
Water footprinting assessment means looking at “the water consumption and pollution throughout their whole supply chain to see where within the supply chain they might have a risk related to water-related to water scarcity, related to water pollution issues or also maybe economic or equitable issues,” he explained.
Earlier this month the non-profit foundation launched an online tool to calculate and map water footprints and assess sustainability. Discussing the WFA Tool 1.0, Usha Rao-Monari, director of sustainable business advisory at IFC, a member of the World Bank Group, said: “Sustainable water consumption goes hand-in-hand with sustainable business. It is a critical issue for businesses, both in their domestic operations and in their global supply chains.”
Industry efforts: Sustainability and risk management
Boumphrey names Unilever, Coca-Cola, Nestlé and PepsiCo as examples of companies already putting resources into tackling their water footprint. Indeed these are some of the big companies that have been working with the Water Footprint Network project.
Professor Hoekstra, founder of the network, said: “It is encouraging to see that industries become interested in the sustainable use of water in their supply chain, and that the finance sector is recognising the importance of accurate information on water use in investment decisions.”
In 2005 protestors in southern India highlighted alleged water scarcity and pollution issues at a Coca-Cola factory, accusing the company of using up the areas water supplies and emitting toxic waste. The long running dispute led to the closure of the bottling plant at one point as local authorities refused to allow the drinks giant to use 500,000 litres of water every day.
In light of this legal wrangling, Coca-Cola was the first company to approach the Water Footprint Network back in 2008 when Professor Hoekstra founded the organisation, Franke said.
“This was a social pressure, but also it can happen that they lack water for the production itself. This means that the production facility would have to stop producing and this will have financial consequences,” he said.
Franke said that there are already cases of this. “But of course companies don’t like to make this public because this reflects a bad image of the company, of their finances and they might have problems.”
Since then, other companies have also begun to assess their water supply sustainability. Donna Jefferies, environmental sustainability scientist at Unilever, said: “To grow our business sustainably we need to reduce the total water used across our value chain, especially in water-scarce regions. As part of our Unilever Sustainable Living Plan, we wanted to understand the water footprints of our crops in different locations, and this developed into the WaterStat database.”
Regional differences and investment choice
Uneven distribution adds to difficulties in calculating the water footprint, Boumphrey warned. “Some populous countries such as India and China have real supply issues whereas others do not. Even within a country the issues are local to specific regions, with other regions having plentiful supplies. Added to this, water stress changes throughout the year with the seasons,” she explained.
Franke said that one solution to such risks would ultimately be to ensure that businesses are not investing in regions where water issues could arise.