Water footprints in the context of strategy
I am convinced that water footprinting has not played out as intended and, in particular, its role in informing corporate water strategies.
A brief recap from the beginning.
As most practitioners know, virtual water or embedded water was a concept introduced by Dr Tony Allan. It is the “hidden flow of water in food or other commodities are traded from one place to another.”
“It was this logic that enabled Tony Allan to challenge the then prevailing thesis that the wars in the next century will be fought over water.”
Dr Allan was awarded the Stockholm Water Prize in 2008 for his revolutionary virtual water concept. Dr Allan coined the term virtual water in 1993 when he researched trade figures of Middle Eastern states to conclude that this water-scarce region was only able to survive through large quantities of food imports in grain, livestock etc.
Thus, the region was not dependent on its own scarce water resources but could purchase water already embedded in agricultural produce. It was this logic that enabled Tony Allan to challenge the then prevailing thesis that the wars in the next century will be fought over water.
The work of Dr Allan was built upon by Arjen Hoekstra, a professor at the University of Twente who also pioneered the concept of the water footprint. His work drew attention to the hidden water use associated with a range of activities and continues to have a profound effect both on scholarship and on environmental policy and activism. Tragically, Dr Hoekstra passed away in November 2019.
I bring up the groundbreaking work of Dr Allan and Dr Hoekstra to put it in the context of corporate water strategies.
I recently published an article titled, Water Footprint versus Water Handprint and hopefully made the case that if we are going to accelerate solutions to solve water, we should be focusing more on the "handprint" of the private sector.
To recap the article, corporate water stewardship is dominated by water footprint strategies such as replenish, water neutral, water positive. While carbon and climate strategies lend themselves to a strategy to become “neutral” or “positive’ with respect to emissions across a company’s value chain, this does not translate well to water.
The reasons are straight forward: carbon is fungible (a ton of carbon in the US is the same as it is elsewhere) and carbon does not have multiple dimensions, unlike water which has economic, environmental, social and spiritual dimensions.
“We will not solve water scarcity and quality challenges by focusing on reducing corporate water footprints.”
We will not solve water scarcity, water quality and access to safe drinking water, sanitation and hygiene challenges by only or over-focusing on reducing corporate water footprints. Water reduction goals are not enough.
While helpful in understanding water risk across a company’s value chain and engaging in collective actions within watersheds, this framework, in general, ignores the real potential of the private sector as a key stakeholder in solving water issues (From Corporate Water Risk to Value Creation).
The role of the private sector
The real value of the private sector is as a key stakeholder in driving innovation: identifying and scaling innovative technologies, business models, financing and partnerships. It is viewing water as not just a risk but a business opportunity that creates business and societal value.
This is shifting from evaluating and developing supply chains based on the footprint of water, to actively playing a hand in driving innovation: the handprint.
A couple of examples:
- AB InBev 100+ Accelerator - The 100+ Sustainability Accelerator will aim to solve 100+ challenges by 2025. The 100+ Sustainability Accelerator will run annual boot camps in nine markets followed by a 10-week program for select entrepreneurs to test and scale solutions.
“Through the 100+ program, we will leverage our global reach and resources to accelerate progress toward the SDGs and our 2025 Sustainability Goals. And we are excited to work with all these innovating partners,” said Carlos Brito, CEO, AB InBev
- Emerald Technology Ventures- launched a water impact fund with strategic investors SKion Water, Ecolab and Microsoft. The fund will invest in early- to expansion-stage companies globally to drive critical innovation and its adoption in the water space.
The bottom line is that AB InBev, Microsoft and Ecolab are doing more than engaging in water stewardship. They are leveraging their know-how, talent, brands and funds to solve water.
I am not a fan of pledges. I am a supporter of action and innovation.