Why Water Should be Central to Your Business Strategy
According to the UN more than 4 billion people experience severe water scarcity for at least one month every year. As the pressure on freshwater resources intensifies, water is no longer just an environmental concern – it’s a material business risk.
Water is often seen as an endlessly renewable resource, but the reality is that earths supply of accessible freshwater is finite. As population growth, climate change and cumulative human impacts continue to strain these resources, competition for water is intensifying.
Water is both a shared resource and a collective risk, recognising the impact of our actions in managing it has never been more important. As businesses and communities face increased water-related risks, this issue can no longer be viewed in isolation.
Across cultures, geographies, and industries, the value of water differs, making it challenging to quantify. Nonetheless, water is indispensable for both life and business. The strategic importance of water arises from its unique ability to connect people, the environment, and economies. The long-term sustainability of any business is only achievable when the communities and ecosystems along its value chain are thriving.
Every business depends on a stable supply of water and, in turn, generate their own wastewater. Many also produce by-products or waste that further degrade the quality of water within their basins and catchments. To fully understand the water-related risks that businesses must manage, consideration must be given to both:
- Basin water-related risks – relating to the overall health, stress levels and resilience of the catchment area or basin from which water is drawn; and
- Operational water-related risks – linked to how a company’s activities affect water quality and availability for itself and others.
Understanding the Types of Water Risks
The risks that can impact business include:
- Physical Risks – water scarcity, flooding, or deterioration in quality.
- Regulatory Risks – changing policies, complex permitting processes, or compliance burdens.
- Reputational Risks – negative perceptions of unsustainable or inequitable water use.
- Financial Risks – increased operational costs, supply chain disruptions, or lost productivity.
- Technological Risks – limited monitoring tools, data gaps, or outdated systems.
- Geopolitical Risks – tensions or conflict over uneven water distribution.
Effective management of available water resources affects not only economic growth but also human health and environmental sustainability. According to the CDP Global Water Report 2020, the cost of inaction on water security is five times higher than the cost of taking proactive measures.
Collaboration is key. Addressing water challenges and turning risks into opportunities will require businesses, industries and governments to work together – because when it comes to water, we’re all in the same basin.
