Water has shifted from an overlooked resource to a critical business asset, influencing corporate strategy across industries. This transformation is driven by climate volatility, technological advancements, regulatory shifts, and infrastructure challenges, making water resilience a key factor in competitive advantage.
What’s certain is ongoing uncertainty: Environmental, regulatory, and economic risks persist for water
Climate change is making water access unpredictable, while outdated infrastructure leads to significant losses — some systems waste up to 30% of treated water. Stricter European regulations on micropollutants, PFAs, and water reuse will escalate compliance costs, compelling companies to reassess exposure to water-related risks. The European Commission’s Corporate Sustainability Reporting Directive (CSRD), though recently reduced to 20% of mandated companies, will increase compliance pressure in the long term.
Necessity remains the mother of invention, and in this case, water circularity is now a strategic necessity for large corporate water users
The risk premium on these uncertainties is exacerbated in the context of a looming macroeconomic downturn. In the U.S., fluctuating policies and trade disputes create challenges and added costs for water infrastructure suppliers. Germany’s current economic weakness and stagnation — driven by high energy costs, trade disruptions, and geopolitical instability — is constraining industrial water demand, estimated to decline by 10%-12% through 2026. Although the EU aims to increase annual water investment to €75 billion by 2030, economic uncertainty could delay projects and stress utilities.
Striking gold in blue: Optimization, investment, AI reshape the water market
Despite this list of sector challenges, necessity remains the mother of invention, and in this case, water circularity is now a strategic necessity for large corporate water users. For example, Coca-Cola’s closed-loop systems in Greece and Nigeria prove near-total water reuse is economically viable, while PepsiCo is investing in rainwater harvesting to mitigate groundwater depletion risks. Over 90% of leading food and beverage firms have set formal water targets, as regulatory pressures increase.
This expectation weighs heavily on the energy sector as it is increasingly dependent on water. While U.S. coal plant retirements cut thermoelectric water withdrawals by 26.8% since 2014, emerging industries — such as hydrogen production and lithium-ion battery manufacturing — are driving new water demands. AI-driven data centers, which require significant water for cooling, are reshaping corporate water strategies. With data centers projected to consume up to 8.5% of total U.S. electricity by 2030, businesses must integrate water and energy planning to mitigate risks.
Private capital is catching on to these shifts towards sustainability with advanced technologies. Firms are driving consolidation, with 334 water-related deals in the first three quarters of 2024. Infrastructure funds and corporate acquirers are targeting digital water technologies, decentralized treatment, and AI-driven leak detection. Engineering firms, utilities, and tech providers are acquiring niche water companies to expand their capabilities.
A primary driver for enhanced capabilities is artificial intelligence, which has begun to revolutionize water management. Tech giants are integrating AI into water strategies — Google DeepMind is working with a European utility to cut system-wide water loss by 25%, while Microsoft and Amazon are addressing their water footprints.
Conclusion: Effective water strategy is a competitive advantage
Companies treating water as a risk-free, ever-abundant resource may face operational disruptions and regulatory exposure. Those proactively managing water as a strategic asset will gain market resilience and long-term competitive advantages. In 2025, water strategy is not just about sustainability, it is about securing a company’s future in an economy where water dictates success or failure.
