Water Stewardship

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20‐Feb‐17 / 1

Water Stewardship: Private sector water challenges

Stuart OrrWWF International

These challenges will grow due to 3 megatrends

• Global population will peak at 9 B by 2050

‒ 65% of population and 1/3 of the land area in severe water stress

‒ 3 B additional people in cities

• Temperature increase ‒ Higher weather variability, less freshwater stored in ice, more droughts and floods

• Urbanization and rising incomes, especially in BRIIC countries

‒ Double irrigation for food demand

Our current global water challenges

• 41% of humans live in areas of severe water stress

• 1.1 B people lack access to safe drinking water, 2.6 B lack adequate sanitation services

• Freshwater species are declining the fastest (70% decline of Living Planet Index since 1970)

• Most industrial wastewater is disposed without treatment 

The World Economic Forum’s annual risk report ranks water crises as #1 global risk in terms of impact.

‘Water crises’ on top of WEF’s 2016 ‘Top Five Global Risks of Highest Concern’ projection

‘Water crises’ in WEF’s ‘Top 5 Global Risks in Terms of Impact’ since 2010

12

13

Water Risk

Agri-business / Forestry Extractive industries Power generationWater industryManufacturing

(Consumer goods) Tourism and leisure Finance & insurance Retail

Financial Risk

Physical Reputational Regulatory

20 February, 2017 - 19

• Stalling of planned power plants• Heavy opposition by other water users • Inflation in food and commodity prices• Expected adjustments of water allocation/regulation

• Insurance and Finance costs and concerns

• NGO questions and awareness• Reputations in question• Investor warnings• Stewardship claims challenged• Dependence and risk recognised

• Value at Risk• Investor warnings• Shareholder concerns• Higher costs to secure water• Legacy of bad interventions

www.icmm.com

Major risk:• 23% cited drought • 55% cited flooding• $bn’s projects on hold

What is at stake?

www.icmm.com

• Water infrastructure = 10% industry CAPEX

• US$3.4b (2009) – US$11.9b (2013), a 250% increase.

• Driving innovation, co-investment, shared infrastructure

What is at stake?

20 February, 2017 - 25

What is at stake?

Justiça bloqueia R$ 500 milhões da Samarco, Vale e BHP Billiton Brasil. O Globo, Fevereiro, 2016

What is at stake?

Disclosing companies reported US$14 billion in water-related impacts this year, a five-fold increase from last year

Corporates are not moving fast enough: Year-on-year disclosures through CDP how that companies are not moving fast enough to address the sustainable management of water

Citi ‘Water Worries: Climatic Consequences’

Credit Suisse ‘Water: The Paramount Megatrend of our Time’

Citi ‘The Growing Impact of Water Scarcity on Mining’

HSBC ‘GDP will be ‘severely hampered by water scarcity’

JP Morgan ‘Watching water: A guide to evaluating risks in a thirsty world’

GoldmanSachs ‘Water could be a constraint on growth’

Morgan Stanley ‘Water: The Perfect Storm’

Standard Chartered ‘Water – The Real Liquidity Crisis’

Merrill Lynch ‘Water scarcity a bigger problem than assumed’

Water Stewardship

Water Carbon

Chronic global shortages already exist Global impacts are slowly increasing

Clear physical and financial risks to business – not only reputations

Specific risks to business are harder to define

Solving water problems is a local issue Solving carbon problems is a global issue 

No single international convention addresses water comprehensively

Addressed through UNFCCC

Shortages can vary disastrously from year to year

CO2 increases and decreases gradually

Meaningful solutions must be found in the watershed

Cap and trade carbon trading systems to address impacts

Confusion over response Confusion over measurement

Response is Stewardship Response is Efficiency

Why is water different from carbon?

Water   awareness

Knowledge of impact

Internal action • Private goods

• Direct control• Efficiency of resources• Products• Internal environment• Impacts

Collective Action

Influence governance

• Public goods• Indirect control• Allocation of resources• Places• External environment• Impacted

WWF Stewardship steps – Our Theory of Change

Shared Risk

Corporate• Physical• Reputation• Regulation

Economic value

Government• Phy/bio‐physical• Social / economic• Institutional

Political

WWF• Bio‐physical• People• Governance

Ecosystem health

Shared risk and opportunity

WWF Leadership on Water StewardshipBusiness Risk Water Footprint Agriculture  Public Policy

Disclosure Investor Risk

Insurance Risk

Mining Risk Stewardship Water Risk Filter

Water Response

Matrix of water-related risks

Examples of key Water Stewardship projects

Test AWS with farmers in the Western Cape with WWF- South

Africa

Alliance for WaterStewardshipWater Futures Partnership

Facilitate local action to address pressing water risks facing farmers, SAB, surrounding

communities and ecosystems

Support SME’s implement water stewardship in Lahore

Water Stewardship Pakistan

Drive ecosystem stewardship program to improve basin's 

resilience

Mondi Wetlands Program

Reduce of EDEKAs ecological footprint and enhancement of the sustainability of leading German

food retailer

Drive collective action in the Taihu lake sub-basin of the Yangtze, notably through

industrial parks

Develop sustainable guidelines and criteria related to water risks

for credit/loans

Brazil

Raise awarenessand influence decisions and

policies inWater and energy

Several partnerships with global leaders in key sectors (F&B, textile, banking, mining, ag.,

retail)

Other partnershipswith global leaders

Edeka cooperation

Encuentro por el Agua

H&M collaboration in China

Key Water Stewardship targets audiences for influence

FIs DFIs Industry associations and regulators

What are companies doing?

• Very different levels of experience and engagement

• Development of baseline data

Number of production units

20 February, 2017 - 44

2% ‐ 3% of GDP 

10% of FEE

25%maize

production7%

national fisheries

national herd

20% 90%

ZambianSugar

Hydropower production

50%

The Kafue Flats: Zambia’s Economic Engine

Ganga basin - Kanpur Leather Cluster

Key Facts about Kanpur

• 12th Largest urban conglomerate in India (population ~3 Million)

• Home to more than 700 tanneries• Considered the most polluted stretch of the

Ganga river

Basin risks

• Heavy Metal pollution from Tanneries• Fast depleting groundwater resources• Urban sewage directly being discharged in the

river

New Tannery Zone in Sialkot• New Tannery Zone under-construction in Sialkot• Soft Loans on low interest for investment on infrastructure

Combined Effluent Treatment Plant in Faisalabad

• Investment in a CWTP near textile industrial cluster in Faisalabad

Construction of Wetlands

• Construction of Wetlands in communities in Southern Punjab and Khyber Pakhtunkhawa (KPK) for improving access to clean water.

Soft Loans – Green Credit lines

• SMEs committing to adopt Smart Environmental Management Plans will get soft loans from ADB.

• Low interest loans for green infrastructure in the tannery zone

Stuart Orr – Practice Lead - Freshwater sorr@wwfint.org