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Demystifying water footprint of a business

- : The water footprint of a business: taking a supply-chain perspective

The water footprint of a business - that is its 'corporate water footprint' - refers to the total volume of fresh water that is used directly and indirectly to run and support the business. It consists of two components:

- the operational water footprint, i.e. the direct water use by the business in its own operations,

- the supply-chain water footprint, i.e. the water use in the business’s supply chain.

Many businesses have a supply-chain water footprint that is much larger than the operational water footprint. This is particularly the case when a company does not have agricultural activity itself but is partly based on the intake of agricultural products (crop products, meat, milk, eggs, leather, cotton, wood/paper).

When consumers use the products from a business, there can also be a water footprint in the end-use stage. Think about the water pollution that results from the use of soaps in the household. In this case one can speak about the end-use water footprint of a product. This footprint is not part of a business’s water footprint, but it is part of the consumer’s water footprint. That does not mean that the business can withdraw from some responsibility about what happens in the end-use stage.

A blue, green and grey water footprint

Water use is measured in terms of water volumes consumed (evaporated) and/or polluted per unit of time. Both the operational and supply-chain water footprint split up into three elements:

- the blue water footprint is the volume of freshwater that evaporated from the global blue water resources (surface water and ground water),

- the green water footprint is the volume of freshwater evaporated from the global green water resources (rainwater stored in the soil as soil moisture).

- the grey water footprint is the volume of polluted water, calculated as the volume of water that is required to dilute pollutants to such an extent that the quality of the water remains above agreed water quality standards.

The water footprint specifies water use in space and time

The water footprint is a geographically explicit indicator, not only showing volumes of water use and pollution, but also the locations and timing. The ecological or social impact of a water footprint obviously depends not only on the volume of water use, but also on where and when the water is used.

Water footprint accounting in private and public sector

Water footprint accounting is relevant for any sort of business, private or public. Business water footprint accounting can be applied for any coherent entity producing goods and/or services that are supplied to consumers or other businesses. It can be done for a private company or corporation, but also a governmental or non-governmental organization or a public utility. It can be applied to various levels of scale, for instance a specific division of a company, an entire company or a whole business sector. Water footprint accounting can also be done for a project (e.g. construction of a piece of infrastructure) or activity (e.g. the organization of a large sports event).

The water footprint of a product

By definition, the water footprint of a business is equal to the sum of the water footprints of the business output products. The supply-chain water footprint of a business is equal to the sum of the water footprints of the business input products.

Water risk for business

Considering and mitigating the water footprint of your business is a way to reduce risk.

- Physical risk: companies may increasingly face freshwater shortage in their supply chain or own operations.

- Reputational risk: the corporate image of a company will be damaged when questions arise among the public about whether the company properly addresses issues of sustainable and equitable water use.

- Regulatory risk: governmental interference and regulation in the area of water use will undoubtedly increase.

- Financial risk: above risks may translate into increased costs and/or reduced revenues.

Water opportunity for business

Risks can turn into an opportunity for those companies that proactively respond to the challenge of global freshwater scarcity. Frontrunners that create product transparency before others do, that formulate specific and measurable targets with respect to water footprint reduction, with special attention to areas where problems of water scarcity and pollution are most critical, and that can demonstrate actual improvements, can turn this into a competitive advantage.

Corporate social responsibility

Reducing the water footprint should be part of the environmental strategy of a business, just like reducing the carbon footprint. Addressing the issues of freshwater scarcity and pollution is part of the corporate social responsibility.

Water footprint: one global standard

A shared standard on definitions and calculation methods is crucial given the rapidly growing interest in companies and governments to use water footprint accounts as a basis for formulating sustainable water strategies and policies. The water footprint is an effective tool only when used in a rigid manner, not when used as a metaphor. The water footprint calculation standard is contained in the Water Footprint Assessment Manual.

What’s new for companies?

- Companies have traditionally focussed on water use in their operations, not in their supply-chain. The water footprint does take an integrated approach. Most companies will discover that their supply-chain water footprint is much larger than their operational water footprint. As a result, companies may conclude that it is more cost effective to shift investments from efforts to reduce their operational water use to efforts to reduce their supply-chain water footprint and associated risks.

- Companies have traditionally looked at reduction of water withdrawals. The water footprint shows water use not in terms of withdrawal but in terms of consumptive water use. Return flows can be reused, so it makes sense to specifically look at consumptive use.

- Companies make sure that they have a water use right or license. Having that is not sufficient to manage water-related risks. It is useful to look into the spatiotemporal details of a company’s water footprint, because details on where and when water is used can be used as input to a detailed water footprint sustainability assessment, to identify the environmental, social and economic impacts and to find out associated business risks.

- Companies have traditionally looked at meeting emission standards. The grey water footprint looks at the required water volume for assimilating waste based on ambient water quality standards. Meeting emission standards is one thing, but looking at how effluents actually result in reduced assimilation capacity of ambient freshwater bodies and at business risks associated to that is another thing.

What can your company do?

Your company can reduce its operational water footprint by saving water in its own operations and bringing water pollution to zero. Keywords are: reduce, recycle and treat before disposal. The operational water footprint can generally brought back to nearly zero. For most businesses, however, the supply-chain water footprint is much larger than the operation footprint. It is therefore crucial that your company address that as well. Achieving improvements in the supply chain may be more difficult – because not under direct control – but they may be more effective.

Your company can cut its supply-chain water footprint by making supply agreements with certain standards with its suppliers or by simply changing to another supplier. In many cases it probably means quite something, because the whole business model may need to be transformed in order to incorporate or better control supply chains and to make supply chains fully transparent to consumers. Among the various alternative or supplementary tools that can help improving transparency are: setting quantitative water-footprint reduction targets, benchmarking, product labelling, certification and water footprint reporting.


(Logo courtesy: Water Footprint Network)

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