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TRANSCRIPT
Understanding and Addressing
Business Exposure to Water-
Related Risks
In Conversation With:
@USCCFBiz4Good
Jennifer Gerholdt – Director, Environment Program, U.S. Chamber of Commerce Foundation
Libby Bernick – Senior Vice President of North America, Trucost
Lindsay Bass – Manager, Water Stewardship, World Wildlife Fund – U.S.
Emilio R. Tenuta – Vice President, Corporate Sustainability, Ecolab
@USCCFBiz4Good
All Participants are muted; please submit your comments and questions during the presentation by doing the following:
• Type it into the comment box (all participants can see it) • Type it into the question box (only presenters can see it) • Tweet it to @USCCFBiz4Good
During the Q&A at the end, USCCF’s Jennifer Gerholdt will offer submitted questions and commentary to the appropriate speakers
The webinar will be recorded and instructions on downloading it and the presentation deck will be sent to all registered participants and available on our website following the webinar.
@USCCFBiz4Good
U.S. Chamber of Commerce Foundation
• Strengthen America’s long-term competitiveness by addressing issues that impact our nation, our economy, the global business environment
• Corporate Citizenship Center – Help business leaders maximize their positive contributions to
address pressing environmental and social challenges – Lend voice to business efforts, deliver insights to inform decision-
making and best practices, and provide a platform for partnerships – Current programs:
• Environment & Sustainability • Health & Wellness • Economic Empowerment • Disaster Response & Community Resilience • STEM • Education
@USCCFBiz4Good
Who We Work With
@USCCFBiz4Good
World of Water Tools
• WRI Aqueduct
• WBCSD Global Water Tool
• WBCSD India Water Tool
• GEMI Local Water Tool
• IPIECA Global Water Tool for Oil and Gas
@USCCFBiz4Good
Upcoming Events April 17 1-3:30 p.m.: Energy-Water-Food Nexus Roundtable In partnership with Lockheed Martin and Bipartisan Policy Center, this event will focus on harnessing innovation to address nexus priorities. Learn more and register at http://bit.ly/1MAX0lS May 6-7: The Circular Economy: Unleashing New Business Value Presented in partnership with The Ellen MacArthur Foundation, this event will explore the powerful impact of the circular economy. Learn more and register at http://bit.ly/1tSYcv1
@USCCFBiz4Good
Thank you!
Stay connected & get engaged
– Website
– Events
– Blog
Jennifer M. Gerholdt Director, Environment Program Corporate Citizenship Center U.S. Chamber of Commerce Foundation Office: 202.463.5332 Mobile: 202.760.5335 [email protected]
@USCCFBiz4Good
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Understanding and Addressing Business
Exposure to Water-Related Risks: The Water Risk Filter
Lindsay Bass, World Wildlife Fund
March 31, 2015
@USCCFBiz4Good
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The World Economic Forum’s annual risk report ranked water
crises as #1 global risk in terms of impact.
@USCCFBiz4Good
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WWF has been a thought leader on the topic of
water-related risks
@USCCFBiz4Good
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WWF’s Water Stewardship Approach
Governments incentivized and motivated to manage and invest in water basins in a sustainable way
Time
Water
Awareness
Knowledge
of Impact
Collective
Action
Influence
governance
Leve
l of
wat
ers
he
d s
ust
ain
abili
ty
Internal
action
Companies, their suppliers and customers have (high level) understanding of the global water challenges, their dependence on freshwater and their exposure to water related risks
Companies have detailed understanding of impact they and their suppliers have (incl. footprint & risk)
Companies take action to optimize internal water governance, improve water efficiency and reduce pollution
Companies, governments and NGO’s are engaged together in multi-stakeholder platforms to address issues
@USCCFBiz4Good
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Framework: Basin and
Company Related Risks
Portfolio of facilities, suppliers or clients
Risks related to company-specific water management and impact
Risks related to location
No / very limited risk
High
High
Strategic imperative in case of high risk:
Focus on collective action
Strategic imperative in case of high risk:
Focus on internal action
@USCCFBiz4Good
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• (Monthly) scarcity • Groundwater • Climate change • Floods • Droughts
Physical risk
Regulatory risk
Reputational risk
Scarcity (quantity)
Pollution (quality)
Impact on Ecosystem
Supplier’s risks
Basin related risk
• 9 pollution indicators
• Threat to freshwater biodiversity • Vulnerability of water ecosystems • Access to safe drinking water • Access to improved sanitation
• Dependence on hydropower
• Local / national water strategy • Sophistication of water regulation • Enforcement of regulation
• Local and global media coverage • Cultural/religious value of water
~30 risk indicators
• Importance of and problems with water availability
• Water withdrawals (not consumption!)
• Water reuse/recycling
• Pollution by facility (incl. industry averages)
• Treatment requirements • Quality measurements
• Legal compliance • Incidents / penalties
• Local and global media coverage • Stakeholder engagement • Internal governance and monitoring
• Water intensity of suppliers • Water pollution by suppliers
~60 risk indicators
NEW! Agriculture specific risks
Company / Commodity related risk
The Water Risk Filter covers all relevant water risk
aspects that ultimately can have a financial impact
@USCCFBiz4Good
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• (Monthly) scarcity • Groundwater • Climate change • Floods • Droughts
Physical risk
Regulatory risk
Reputational risk
Scarcity (quantity)
Pollution (quality)
Impact on Ecosystem
Supplier’s risks
Company related risk Basin related risk
• 9 pollution indicators
• Threat to freshwater biodiversity • Vulnerability of water ecosystems • Access to safe drinking water • Access to improved sanitation
• Dependence on hydropower
• Local / national water strategy • Sophistication of water regulation • Enforcement of regulation
• Local and global media coverage • Cultural/religious value of water
• Importance of and problems with water availability
• Water withdrawals (not consumption!)
• Water reuse/recycling • Pollution by facility (incl. industry
averages) • Treatment requirements • Quality measurements
• Legal compliance • Incidents / penalties
• Local and global media coverage • Stakeholder engagement • Internal governance and monitoring
• Water intensity of suppliers • Water pollution by suppliers
‘Too easy not to do’!
• Just provide location of facility/supplier/investment • Upload multiple locations at once
Provide location information for Basin-Related risk results
@USCCFBiz4Good
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• (Monthly) scarcity • Groundwater • Climate change • Floods • Droughts
Physical risk
Regulatory risk
Reputational risk
Scarcity (quantity)
Pollution (quality)
Impact on Ecosystem
Supplier’s risks
Company related risk Basin related risk
• 9 pollution indicators
• Threat to freshwater biodiversity • Vulnerability of water ecosystems • Access to safe drinking water • Access to improved sanitation
• Dependence on hydropower
• Local / national water strategy • Sophistication of water regulation • Enforcement of regulation
• Local and global media coverage • Cultural/religious value of water
• Importance of and problems with water availability
• Water withdrawals (not consumption!) • Water reuse/recycling
• Pollution by facility (incl. industry averages)
• Treatment requirements • Quality measurements
• Legal compliance • Incidents / penalties
• Local and global media coverage • Stakeholder engagement • Internal governance and monitoring
• Water intensity of suppliers • Water pollution by suppliers
Fill in questionnaire for Company-Related risk results
@USCCFBiz4Good
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Physical risk
Regulatory risk
Reputational risk
Scarcity (quantity)
Pollution (quality)
Impact on Ecosystem
Supplier’s risks
Total risk
Company related risk
Basin related risk
Scores range from 1 (no/very limited
risk) to 5 (very high risk)
Facility Level
Risk Heat Map
@USCCFBiz4Good
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Three reports are automatically populated
1. Portfolio level: overview of all assessed facilities of the company, including maps
2. Facility level: detailed overview of all available water information of the facility, including maps and key mitigation responses
3. CDP Report: information available in the Water Risk Filter populates >80% of the CDP questionnaire.
@USCCFBiz4Good
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4-10 pages description of local context
>25 quantitative indicators
download in PDF
Unique country profiles provide local context
@USCCFBiz4Good
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Each response contains: Why, How, References, Related case
studies Version 2.0:
100+ new responses specific for agriculture
>200 mitigation responses and >100 case studies
–
bridging gap from risk to action
@USCCFBiz4Good
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Risk Filter: Top Ten Summary
1. Quantifies risks through metrics
2. First tool to cover all risk elements (not only scarcity and pollution related to location) that can influence bottom line of businesses
3. Sees risks from business perspective, not from ecological impact perspective
4. Covers entire globe, all industries and supply chains
5. Industry specific weightings that can be further tailored by user
6. Extensive mapping capabilities
7. Freely available online tool, designed to be easy-to-use for non-water experts
8. Quick View is too easy not to do, and provides lots of information
9. >200 detailed country profiles
10. Mitigation toolbox: first overview of >200 known responses and >85 case studies
@USCCFBiz4Good
US Chamber of Commerce Foundation Webinar
March 31, 2015
Libby Bernick
Senior Vice President, North America, Trucost
WATER SCARCITY: FROM AWARENESS TO ACTION
Incorporating water scarcity into business decision making with the
Water Risk Monetizer
@USCCFBiz4Good
WHERE WILL BUSINESS GROW? 24
Major Growth Cities
Largest Population
Fastest
Growing
Biggest
Economies
1 Tokyo Dhaka Tokyo
2 Delhi Beijing New York City
3 Seoul Delhi Los Angeles
4 Shanghai Karachi Seoul
5 Mumbai Shanghai London
6 Mexico City Calcutta / Kolkata Paris
7 São Paulo Mumbai Osaka/Kobe
8 Beijing Manila Chicago
9 Lagos Mexico City Moscow
10 Osaka Los Angeles Shanghai Source: Trucost research based on Water Risk Monetizer data, Brookings
Institute data (2014), PWC global cities rankings (2012)
High water scarcity or current drought
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WATER PRICES INVERSE TO
SCARCITY (RISK)
Progressive companies are:
Recognizing that the water bill does not reflect the true value of water.
Assigning values that reflect the real importance of water to their ability to do business
Considering stakeholder interests, community needs, and societal costs
Analogies:
Weighing cost of capital for an acquisition
Assigning a cost of carbon
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ASSIGNING A VALUE TO WATER
Example Trucost clients
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A financial modeling tool that provides a new way for businesses to
incorporate water risks into business decisions by helping businesses
understand the full value of water to their operations.
First-of-its-kind Publicly available No cost
By quantifying water-related risks in financial terms, the tool bridges
the gap between today’s low market price for water and the water risks
that affect businesses around the world.
The result is actionable information that supports business growth
and helps ensure the availability of this limited natural resource for
future generations.
www.waterriskmonetizer.com
@USCCFBiz4Good
Financial
information to
inform business
decisions:
Risk-adjusted water price: Forecasted water bill plus water risk
premium represents the value that should be placed on water
based on real and future risk related to water scarcity. 3
1 Current and future water bill: Forecasted water costs
based on the historical relationship between country level
GDP and water price.
2 Water risk premium: An estimate of the financial value of
water if it were priced according to market principles of supply
and demand at a particular location. The premium considers the
risks associated with a facility’s ability to access the water it
needs from the local watershed and the implications of that
water use on the community.
28 @USCCFBiz4Good
http://www.youtube.com/watch?v=WS6s4M5J_
Pg&list=UUNJGBA584r6N6pmPZt_GwFQ
29 @USCCFBiz4Good
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www.waterriskmonetizer.com
EXAMPLE:
PAPER BOARD MANUFACTURING
@USCCFBiz4Good
© 2014 Trucost Plc
Company Proprietary and Confidential
Libby Bernick, P.E.
Sr Vice President
Thank you!
@USCCFBiz4Good
FROM CONSERVATION TO STEWARDSHIP
INFORMING BETTER WATER MANAGEMENT STRATEGIES
US Chamber of Commerce Foundation Webinar
March 31, 2015
Emilio Tenuta
Vice President, Corporate Sustainability
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@USCCFBiz4Good
SHIFTING FROM CONSERVATION TO
STEWARDSHIP
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Water Conservation Water Stewardship
Facility:
Reduce
Recycle
Reuse
Understand and align to catchment
objectives for sustainable freshwater
use. Opportunities to create a
corporate water strategy
Challenge: Investment in water reduction strategies
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• Incorporate a risk-adjusted cost of water into a facility
budget, financial projections, business scenarios,
project proposals, etc.
• Make the case for proactive water management
strategies (solutions, technologies, programs, etc.)
• Identify operations/locations at greatest risk
• Monetize rate of return for water management
improvement projects
• Select where and how to increase production or meet
demand in new regions
Businesses can
use the Water Risk
Monetizer to:
@USCCFBiz4Good
1
INFORMING WATER REUSE DECISIONS
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IDENTIFYING WATER
SCARCITY RISKS
OPERATIONAL ASSESSMENTS
VALUATION OF RISK
FRAMEWORK FOR ACTION
Site & enterprise
assessments
Tools:
• WRI Aqueduct
WWF - Water
Risk Filter
• Water
Footprinting
Network
• Global Water
Tool
Identify current state
& opportunities to
improve
Tool:
• Total Plant
Assessment
Understand risks in
financial terms
Tool:
• Water Risk
Monetizer
Follow established
principles for action
Tool:
• AWS:
International
Water
Stewardship
Standard
2 3 4
EXAMPLE: WRM APPLICATION 37
Five facilities were identified as “high risk” using the Aqueduct or WWF Water
Risk Filter tool. Now what?
Water Risk Monetizer provides a water
risk premium ($) to rank facilities by
financial risk, and calculate the risk
adjusted ROI of an investment in water
conservation.
Sample results for illustrative purposes
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WRM KEY FINDINGS: Brewing Company
Prioritize action based on highest risk premium, water extraction rate and growth projections for five brewery’s in APAC – “hot spots”
Understand the implications of regulatory and reputational risks
Identify major water unit application areas and benchmark intensity versus other managed properties in region
Leverage the risk adjusted price to invest in water management strategies based on level 1, 2, 3 prioritization
Year Facility Name Country City
Unit Output Beer
(HL per year)
Amount of Water
Used (m3 per year)
Amount of Water
Used (HL per year)
Water Use Intensity
(HL water per HL beer)
Water In Price
(USD per m3)
Yr 1 Risk
Adjusted Price
($/m3)
Facility 1 China Shanghai 765,136 370,326 3,703,260 4.84 $0.31 $4.79
Facility 2 China Beijing 643,018 277,141 2,771,410 4.31 $0.59 $5.07
Facility 3 India Pune 724,226 297,657 2,976,570 4.11 $0.64 $5.12
Facility 4 India Mumbai 644,803 255,987 2,559,870 3.97 $0.28 $4.22
Facility 5 S. Korea Seoul 924,211 388,212 3,882,120 4.20 $0.58 $1.92
2014
a b c
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WaterRiskMonetizer.com
@USCCFBiz4Good
“Water stewards understand their own water use, catchment context and shared risk in terms of water governance, water balance, water quality and important water-related areas; and then engage in meaningful individual and collective actions that benefit people and nature.”
– Alliance for Water Stewardship (AWS)
GLOBAL WATER STEWARDSHIP
AWS 6-STEP FRAMEWORK
www.WaterRiskMonetizer.com
42 @USCCFBiz4Good
Corporate Citizenship Center Jennifer Gerholdt
World Wildlife Fund Lindsay Bass
@USCCFBiz4Good
Trucost Libby Bernick
Ecolab Emilio Tenuta
Discussion, Questions, and Contact: