building resilient systems water stewardship as a …...building resilient systems: water...

Building Resilient Systems

Water Stewardship as a Basis for Smart Investment

EVENT REPORT

Building Resilient Systems:

Water Stewardship as a Basis for Smart Investment

How can Europe become more resilient to the accelerating and disruptive environmental,

economic and social changes in a world of diminishing resources? How can Europe manage

conflicts between energy production, water use and food production, and still build a bright

future for its citizens? What role does water play in this effort? What is the role of industry,

agriculture, investors, regulators, cities and civil society to build a more resilient Europe?

On 1 July 2015, representatives of global companies in the mining, transportation, chemical,

construction, food, agricultural and manufacturing sectors joined EU national policymakers

and civil society at the 2015 European Water Partnership summit to discuss these questions.

Hosted by Team Finland at the Finnish Representation to

the EU in Brussels, participants engaged in a lively

discussion on the benefits of a circular economy for Europe,

and, focusing on water, the systemic approach required to

bring it to life. Participants shared:

• the experience with water stewardship in their sites, cities and in agriculture, and the improvements they saw as a result ,

• their suggestions on how to further better the water status in Europe and move towards a circular economy.

• financial aspects of innovation in the water sector, looking at water related risks and opportunities through the eyes of investors and shareholders, while creating incentives for sector investment and innovation.

• concrete next steps for organisations thinking about improving their water management practices as part of their corporate social responsibility journey.

© 2015 European Water Partnership. All rights reserved. 1

On behalf of the European Water Partnership and Team Finland we thank the event sponsors

BASF and Kemira for making our event possible and to our audience and speakers for making

it such a success!


I. AN INTEGRATED APPROACH: MOVING FROM SINGLE-ISSUE INSTRUMENTS

TO WATER STEWARDSHIP

Introducing the event, Member of the European Parliament Sirpa Pietikäinen pleaded for a

new holistic thinking in Europe, ending the long history of single resource focused regulatory

silos, often contradictory one to another, and short term efficiency efforts. While Europeans

are well aware of the challenges in managing natural resources, and water in particular,

solutions are not as simple as reducing water consumption. Rather, Ms. Pietikäinen called for

a systemic and multidisciplinary approach, requiring a shift in our collective thought

processes and careful planning to develop a true solution. At their inception, products and

commodities need to know where they go, once the end of their lifespan is reached, and it

should not be on the landfill. Re-use needs to be central to that planning, as today’s waste are

the resources of the future. Techniques to abstract recycled nutrients from irrigation grey

water a great example of improvements that are within immediate reach.

"Europe needs to rethink its resources strategy holistically and break the silos of single resource efficiency

efforts that too often end up in contradiction one to another"-Sirpa Pietikäinen, European Parliament

A shift to a circular economy will require greater valuation of ecosystem services. Instead of

individual solutions developed for specific challenges, this new approach would involve

multidisciplinary teams, able to collectively think holistically: mechanical, electrical, chemical,

hydraulic, medical, bio-technical, agricultural, IT, safety, financial, policy and legal experts

combining their skills to produce the desired outcome. Ecosystems will need to be flexible,


and provide expertise on demand to overcome the constraints of effective resource

management. Regulation will almost certainly be a central element to removing bottlenecks to

circular economy and a help in setting a level playing field for industry and agriculture.

I.I Collective Action Partnerships for Resilience

The first session “An Integrated Approach: Moving from Single-Issue Instruments to Water

Stewardship” was opened by DG Environment’s Head of Water Unit, Pavel Misiga who gave an

overview of the importance of European water policy and some of the progress achieved

despite the economic challenges faced by many member states. For Mr. Misiga the connection

between water and a successful economy is clear. High quality water is absolutely critical for

a number of sectors which are increasingly dependent on a reliable source of water for their

activities. From chemical sectors, to food production and processing, these sectors constitute

a large part of European GDP and exports.

"Water represents a huge opportunity for growth, innovation and for return on investment for the private

sector"-Pavel Misiga, European Commission DG Environment

A review on the status of European water bodies showed that new incentives and actions will

be necessary to further improve the water status in Europe. Participation by all economic

actors and the public will continue to play a critical role. Member states alone will not be able

to reverse trends of water scarcity in Europe. The 7 billion euros currently invested by

member states are insufficient to address the existing infrastructure challenges. Most water

systems have been designed tens of years ago, with planning that does not reflect the present


societal and economic reality. Systems need to become more flexible and demand driven.

Building adaptive systems will require public and private investment.

The potential gains through efficiency measures alone are significant, and present a real

opportunity for investors to develop them. Mr. Misiga remarked “Water partnerships and

stewardship can help remove some of these barriers to meet water management objectives,

lowering risk to industry and society”. The private sector will be pivotal in making change

happen, and those companies actively engaging in the change or investing in water solutions

will reap the benefits.

Agriculture and Water Issues in Europe - culprit or victim?

No doubt agriculture plays a central role in improving the water status in Europe. Agriculture

has a long way to go to significantly reduce its impact on surface and groundwater. Intensive

farming for example, is often directly linked to the quality of the surrounding catchment. Are

farmers simply not taking care? Why is that so, and what needs to happen to change the

game?

According to Gerard Rass, Secretary General of APAD (Association pour la Promotion d’une

Agriculture Durable), farmers are asked to do a better job, without the financial capability to

do so. Consumers want it all: safe, ideally organic produce, in large quantities, at low costs.

The pressure of retail and EU incentives add to the issues farmers face. Many are simply

caught in the dilemma between their aspiration to responsibly manage environmental

challenges and pure economic survival. Long-term sustainable solutions for water challenges

cannot be developed without addressing the economical side of the equation.

"As Farmers, we actually know how to increase capital and cash-flow while improving the water

status - however the EU needs to review their incentive structures to enable the change. Current

policies cement the unsatisfactory status quo."- Gerard Rass, Secretary General APAD

Solutions exist already today. APAD works with stakeholders such as EWP as part of a

widespread platform for Collective Action Partnerships for Water Stewardship in Agriculture

(CAPWaSA). In the case of French farmers the platform supports their efforts to implement


soil preservation methods that actively reduce the need for nutrients and pesticides. APAD’s

arguments are economic ones, based on concrete cases of farmers that have been able to

improve their yield, lower their energy bill, and generate a better cash flow, while at the same

time growing their true capital, their soil. In many of the cases, farmers were able to more

than double the organic matter present. The extensive use of cover crops which APAD

advocates comes with additional benefits for the environment: increased biodiversity, carbon

sequestration, reduced topsoil erosion caused by wind and runoff, higher water absorption

and retention capabilities which reduces flood risk.

When enough farmers are engaged in these activities in a single river basin their efforts lead

to improved water quality in the surrounding catchment area. By consequentially lowering

the cost of water treatment, such projects are able to create a real win-win situation between

participating farmers, the water board and the local community. Rass also invites regulators

to review the results to include these sustainable farming methods and river basin

partnerships in their policy efforts and in their incentives programmes.

Chemical leaders should volunteer to lead the change

For BASF, as a global leader in the chemical industry with more than 350 sites worldwide,

good water management, especially in terms of quantity available, is absolutely essential for

the company and its growth, particularly where trends such as climate change and population

increase have led to competitive demands for water.

"EWS is the adequate response to water risks within the BASF Group"- Andrea Stoegbauer, Global

Water Expert, BASF

Global water expert Dr. Andrea Stoegbauer elaborated on the manner in which BASF

proactively addresses water issues using the framework provided by EWP’s European Water

Stewardship Standard, particularly in water stressed areas. "As a global chemical company


celebrating its 150th anniversary this year, water has always been at the heart of our

operations. EWS is the adequate response to water risks within the BASF Group." BASF

reported that the framework proved to be an invaluable tool to work with neighbouring

communities as well as local and regional authorities to find site specific solutions, identify

priorities and lower the impact of industrial activity on the local watersheds. The framework

has held up to its promise outside of Europe, as their American and Chinese sites have also

incorporated the methodology into their water management. In applying the standard, the

chemical industry is able to anticipate stakeholder concerns, lower corporate risk and invest

intelligently to reduce operating costs and secure its license to operate. These benefits are

compelling incentives for all players in the industry to act now.

This perspective was shared by Bengt Hansen, project leader at Kemira, showcasing their

recent experience as water solutions company in helping pulp and paper giant Stora Enso

establish a local stakeholder programme for a new paper mill in Southern China. Partnerships

such as these are an essential part of the local license to operate, based on relationships of

trust with the neighbouring communities, and also regional and national authorities and

stakeholders. Water quality concerns have been addressed early and decisively. Engaging all

the necessary actors early on in the process ensures the sizeable investment in local

wastewater treatment and fresh water supply infrastructure has the desired long-term

business impact. Mr .Hansen received a response from the audience encouraging him to help

Stora Enso take the next step in verifying their performance with certification.

"Water quality and quantity are key concerns for the neighbouring communities in our projects. It is

essential to proactively address these upfront, and involve stakeholders in the decision

process."-Bengt Hansen, Kemira

Responses from the audience clearly indicated strong interest in hearing more about

partnerships involving industry, agriculture, water boards and river basin management

authorities. Several participants called for more support by the European Commission for


such initiatives and projects. Mr. Misiga encouraged water users to develop water

management solutions of this kind. “The Commission likes to see that more and more

companies are taking the initiative to establish these partnerships”. Partnerships that engage

municipalities and authorities in their activities are well aligned with the goals and priorities

of the EU and the Water Framework Directive. They result in real economic and

environmental benefit for all local participants.

Event participants pose their questions to the panel members.

Looking at these outcomes from these partnerships at a macro-level, the European

Commission expects to see a concrete financial value for the direct and indirect contribution

of improved water status in Europe. DG Environment has initiated a cost-benefit analysis of

the Water Framework Directive implementation to assess the value of ecosystem services

provided by freshwater resources. Beyond the Water Framework Directive, the Commission

is now developing new strategies for pharmaceuticals, nutrient management and water reuse

as part of the new circular economy package, and it is expected that these strategies will be

enabled through corresponding financial instruments.

I.II Securing a Water License to Operate and Protect Brand Value

The second panel of the day saw representatives from a wide range of sectors all with one

thing in common; their “water” license to operate is central to management given their role as

industry leader. Whether the company had a large responsibility as significant water-using

industry, such as in the meat processing sector, or they had a small water footprint but

considerable quantities of discharge to deal with, as the case of the cement sector; water

stewardship manifests similar benefits.

Framework for collective action and risk sharing at Antwerp Port Authority

Representative from the Antwerp Port Authority, Environment Manager Eric de Deckere,

elaborated on the way in which good water quality is actually a higher priority than water

availability. High water quality is essential for the 900 companies operating in the Port, and


the water stewardship standard has been a valuable framework for all participants to

collaborate on improvement schemes. However many of the water issues are inherited from

upstream locations. Antwerp therefore carries a higher burden as a port to achieve good

water status, but can rely on the governance principle of the water stewardship standard to

engage with river basin management and upstream industry, cities and agriculture to

communicate and ultimately share risks and costs to achieve water quality objectives in the

catchment.

"Water stewardship provides us with a good framework to collaborate on water quality improvement within

the Port, but also with the upstream neighbours"-Eric de Deckere, Antwerp Port Authority

Putting this into practice the Antwerp Port Authority has initiated a Sustainability Report to

set criteria that link management issues with environmental performance issues. This is

particularly helpful for companies to better understand their actual influence on water

pollution, extending even to those substances which companies don't normally regard as

problematic, but which create complications when collectively transported downstream.


Stewardship as catalyst to decrease risks and drive higher efficiencies at ABP Food

Group

Water stewardship initiatives are proving to be essential for companies to develop targeted

strategies water management strategies. Barry O’Donovan from ABP Food Group, revealed

the Irish based company’s experience undergoing certification against the European Water

Stewardship standard. The experience guided them to develop targeted messages on water

use, enforcing behavioural changes amongst staff, implement widespread metering and set

alarm systems warning for potential risks on-site. For its part, ABP Food Group realized a

50% reduction in its water use while undergoing the process of certification thanks to the

systematic approach developed for prioritizing investments under the EWS assessment.

"We have engaged our staff on a major change programme to lower our water risks and gain

efficiencies in water use, for which EWS is a useful catalyst and communication tool."-Barry

O'Donovan, ABP Food Group

Similarly, the European Crop Protection Association (ECPA) works with its member

companies towards the end of goal to jointly reduce the impact of its products on biodiversity,

food, water and health. ECPA has published best practice papers for on the adoption of new

farming techniques to lower pesticide use, reduce top-soil erosion and runoff, avoid drift

spray, and improve water status. ECPA also worked with its member companies in a joint

EWS pilot initiative to study the most efficient measures for water management throughout

the sector, paying close attention to water security, abstraction levels and quality of

discharge.


"Five pilot sites have indicated to us how robust but also how applicable the EWS standard is in

practice and has helped us to understand what we are doing right and where we have room to

improve." - Stuart Rutherford, ECPA

The EWS standard represents both validation of a job well done where the principles have

already been applied, but due to the comprehensive nature of its criteria, it also raises the bar

for the industry as a whole. Application of a voluntary certification scheme throughout a

number of production sites is indicative of a sector’s overall performance level. For ECPA, this

rounds off a series of efforts to provide an end-to-end perspective on the entire value chain

from production to the actual use of crop protection substances.

An effort that actually pays off

Stuart Rutherford, European Crop Protection Association Director of Water & Environmental

Affairs, also concluded that the assessment performed by companies under the EWS initiative

provided them with a tool to collectively address previously identified risks and deal with

them in a strategic way. Stories shared by companies was evidence of the way in which water

stewardship helps prioritize decision-making on water, based on the local conditions of each

production site, optimizing both financial resources and technical know-how.

Beginning its water stewardship journey, Heidelberg Cement has elaborated water efficiency

and recycling plans for all mines in extreme water-stressed areas. Michael Rademacher,


Director for Biodiversity and Natural Resources, said the company actually realized

significant savings in their restoration activities. For one of the largest mining companies, the

largest challenge has been where to prioritize its actions. Heidelberg Cement is working with

EWP to begin its water stewardship journey by assessing where their key water hot spots are

located and develop clear response measures as part of a broader water stewardship strategy.

Michael Rademacher, Heidelberg Cement

Stories shared by representatives from the crop protection, mining and port sector are proof

of the manner in which water stewardship guides companies to realize and respond to their

water-related risks while at the same time validating their achievements. As shareholder and

consumer awareness grows, companies need to have a secure response strategy in place to

ensure their license to operate and strengthen their global brands. Closing the panel,

moderator Fritz Barth reiterated on the manner in which water stewardship lends a hand to

drive the real change and innovation needed to drive circular economy.

II. Investments Driving Systemic Change

Member of the Vice-President’s Cabinet from the Commission for Jobs, Growth, Investment

and Competitiveness, Heidi Jern opened the second session of the day focusing on the role of

investments in driving systemic change. A key priority for policymakers are investments

centred around regaining competitiveness and stimulating growth within EU. While Ms. Jern

acknowledged that there is no quick fix nor a one-size fits all solution to get EU back on track

in terms of economic development, encouraging diverse funding options, rather than

dependency on single financial instrument, will increase capacity to attract private sector

investment.


"EU funding needs to stimulate economic development and act as a catalyst to increase private sector

investment, especially so in important infrastructure such as Europe’s water systems."-Heidi Jern,

European Commission

New tools such as the European Fund for Investment or the EU Investment Advisory Hub are

mobilizing new and high-risk investment in the global economy, where projects leading to

better environmental and resource efficiency are key pillars. The tools provide assistance for

projects and SMEs to ensure that they meet regulatory objectives such as the Water

Framework Directive, and support them in increasing their capacity, thereby making them

more attractive to private investment. There are also services which link investors and

entrepreneurs by assessing the market readiness of projects, helping investors to address

uncertainties.

II.I INVESTING FOR THE FUTURE: MATCHING OUR WORDS WITH ACTIONS

In setting the sustainability agenda, engaging the necessary parties is necessary to ensure

successful investment and thus the economic viability of the initiative. The last panel of the

day highlighted the manner in which water stewardship to stimulate investment for

sustainable water management; directly by increasing funding for water services, indirectly

by reducing investor risk, and developing tools for connecting investors with eco-innovation

in the market. All opportunities have enormous possibility to create significant growth and

promote innovation for the European economy.

Fritz Barth, EWP Chairman, stressed the need to expand investment for water-related

infrastructure, inadequate services still result in a number of environmental and health issues

in Europe. Outdated and faulty infrastructure alone accounts for 50% water losses in major

European cities. Mr. Barth attributed a slow uptake of technological innovation and low

investor to low water prices. Mr. Barth called for a substantial increase of investment into

Europe’s water systems and infrastructure as key driver for Europe’s competitive

differentiation through safer agricultural and industrial goods, as well as through a newly

comforted leadership position in environmental technology.


“We need considerable more investment in order to save our failing water infrastructure”.-Friedrich

Barth, European Water Partnership

Ramón Vallés from Zabala Consulting offered the perspective that eco-innovation in water is

indeed more challenging due to low water prices. However, Vallés sees progressive

companies embrace innovation to better achieve their commitments to environmental

targets, communicate their achievements and build brand equity. The INNEON platform was

built to connect eco-innovators with potential investors. The platform also provides education

and advice to all participants on the process and mutual expectations, lowering risks for both

development and investment and ultimately leading to new investment in water

infrastructure and technology innovation.

“So far INNEON has successfully helped 9 eco-innovators to become investor-ready with 21 under

coaching before linking them with respective investors.”-Ramon Vallés, Zabala Consulting

Riku Vahala from Aalto University shared findings from Finnish academic research on the


economic advantage of water stewardship that should lead to increased innovation. Research

shows that an internal risk assessment provides useful guidance for companies to realize

which areas of innovation to target. Vahala called for companies to engage their supply chain

in the water stewardship efforts.

“An essential part of water stewardship for companies, is the need to engage their wider supply

chains in sustainable water management”.-Riku Vahala, Aalto University.

Schemes that increase the investor's’ understanding of water related risks are useful to drive

change, despite the fact that water remains largely a local issue. Emma Lupton from CDP

confirmed that companies are still slow at providing enterprise-wide consolidated figures of

their water impact, that investors however on the other side wish to better assess their risks.

Emma Lupton, CDP


It was clear from the discussion with panellists that while regulatory measures in place may

drive investments, the most cost-effective solutions will be driven by the engagement of the

private sector. Mr. Andre Liebaert from DG DEVCO called on “EWP to mobilize more private

sector partners in order to address the water challenges in developing countries in

partnership with the EU Institutions and to work jointly on the achievements of the

Sustainable Development Goals.Building corporate targets when it comes to sustainability

will engage the private sector and their shareholders and enhance knowledge share of the

best management practices by sharing tried and tested new ideas with the public. European

institutions continue to play an important role in reducing barriers to the uptake of

innovative and systematic resource management and address an overall reluctance in society

to introduce new technologies.

Audience poses questions to members of the final event panel.

III. Conclusion

Europe is just at the beginning of its journey to a circular economy. The transformation bears

many opportunities for innovation and monetization of new business concepts that embrace

the new paradigm. Water is a key resource that embodies the very nature of circular use,

understanding that water is always abstracted from, used, often re-used and then returned to

the environment. The European Water Stewardship standard has enabled a shift in mindset

with participating industry, agriculture and cities already making clear commitments towards

a better management of this increasingly valuable resource.

Regulatory measures will be a central element to removing bottlenecks to sustainable water

management; building the right incentive structure for agriculture to be able to embrace its

mission of becoming good water stewards on behalf of the greater public benefit; accelerating

innovation in resource management and making the current European financing tools more

accessible for small and medium sized enterprises. The event highlighted the role of European


institutions to lend more credibility to innovation in the market to encourage investment in

eco-innovation.

An open question remains the low price of water, often favoured for political reasons, that is a

barrier to new investment in modern and efficient water systems. If water is priced at its real

value, financial institutions will see benefit in shifting more investment into the water sector

leading to significant innovation and job opportunities in Europe. As investors take

heightened interest in corporate risks related to water, industry is increasingly adopting a

holistic risk management approach, making full use of schemes such as the European Water

Stewardship standard to guide investment decisions and reduce their exposure to risk.

The number of stories, case studies and knowledge around water stewardship presented at

the event demonstrates that water stewardship has come a long way from conceptual

thinking to very concrete application. The event successfully identified some of the key

stakeholders in enabling a systematic change in water management. Agriculture is key in

reducing the remaining gaps in river basin management, with a clear role for farmers and the

food sector to lead the change, which, given the correct incentive structure and compensation,

will produce a noticeable improvement of the water status in European rivers. Larger

metropolitan areas have a very special role in federating larger groups of businesses and

citizens around water resources, and sharing the effort, in coordinating actions for a

meaningful impact.

“Looking forward, it will be important to continue to share knowledge on the impact and the results

of the water stewardship actions, which in turn will help turn them into bankable projects”.

-Thomas Vereijken, European Water Partnership

Water is a shared resource and good water stewards should get their recognition for their

achievements - It is encouraging to see that participants to this events actively communicate

their goals, share their experience and spread the word, to ensure that water stewardship

continues to gain ground for the greater common benefit.


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