When companies think about risk, most of them don’t think about water. Historically, water has been available even in areas prone to drought, and flooding followed a fairly predictable pattern. But as the climate warms, the world is beginning to see more extremes — and that often means too little or too much water. Water scarcity contributes to wildfires, but other problems, too: As the water table drops, the quality of the water degrades, often leading to increasing concentrations of minerals and salts that are expensive to treat or can even make the water unusable. On the other extreme, more violent storms are already making flooding a new risk in areas that didn’t worry about it before. Floods and droughts are now sudden, unforeseen events — and increasingly hit areas in quick succession.
From Droughts to Floods, Water Risk Is an Urgent Business Issue
As climate change advances, floods and droughts are now sudden, unforeseen events that increasingly hit areas in quick succession, and this growing variability has caught major corporations unprepared. New regulation is forcing companies to confront this growing risk. Companies need to understand their vulnerabilities and plan how to address them. They should start by assessing their water quantity impacts and setting water use reduction targets that are informed by local conditions. Second, they should assess their water quality impacts and use this assessment to set targets and develop action plans to improve that impact, such as reducing the use of harmful chemicals, investing in recycling technology, and reducing pollutant discharges. Third, companies should engage deeply in water stewardship activities in the basins in which they operate by advocating for watershed protection, or by supporting new water conservation and groundwater sustainability policies. Finally, companies should ensure that water-related risks and opportunities are fully embedded within corporate governance and decision making.