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Why water is so vital for business cost-efficiency

  • Why water is vital for business cost-efficiency

About the entity

H2o Building Services
H2O Building Services is one of the UK’s leading providers of commercial water management and consultancy services. With unparalleled expertise in carrying out water audits, we specialise in reducing water saving businesses money on their water bills

Businesses everywhere will have all sorts of plans in place to increase cost efficiencies. This may include their energy use (especially in recent times), their manufacturing processes or working practices, their staffing levels, or the potential to sell off surplus assets at a good price.

All these and many more things may be useful in helping firms save money and make money, but what of water? Are companies overlooking the fact that switching to a new business water supplier could make a major difference to their bottom line?

The very thought might have escaped the notice of some, but there should be no excuse for this now, following the publication of new research into the benefits of businesses valuing efficient water usage.

A study by CDP based on water disclosures by 591 major international companies over a period of five years from the start of 2018 to the end of 2022 revealed what it called ‘the huge risks and opportunities from tackling the water crisis’. The list of firms studied included Volkswagen, Samsung, Danone, Hewlett Packard, Mars, L’Oréal and Nissan.

Not only did water efficiency emerge as the leading opportunity to save money in almost every industry in the study, but the report calculated that the combined benefits to the private sector if it acted correctly to address issues of water security could be worth as much as $2.3 trillion (£1.8 trillion).

This included the potential for new products and services that help save water, valued at $1.7 trillion, while ‘new water-related markets’ will be worth $328 billion and enhanced resilience against bad weather an extra $231 billion.

Senior manager for water at CDP Miriam Denis le Seve commented: “The private sector should be treating water as a precious and fragile resource full stop.” However, she added: “What this data tells us is that water security is also good for business, with financial opportunities each year running into the hundreds of billions of dollars.“

All this may seem like a remarkable revelation, but the fact is that many firms are already cottoning on to the opportunities that exist and acting accordingly. For example, the report noted that these firms collectively invested $79 billion in 2022 alone to reduce water risks.

In addition, 58 per cent of companies either reduced their water withdrawals or did not increase them, while 63 per cent carried out a ‘water-related risk assessment’ and 83 per cent ‘engaged their value chains’ on this issue as well.

Furthermore, over 1,100 chief executive officers reported to CDP that water goals form a part of the performance evaluations that determine their pay and rewards, indicating that the issue is being addressed at the very top of firms.

Chief governance and compliance officer at Norges Bank Investment Management Carine Smith Ihenacho, said: “This data shows the large financial opportunities that exist for companies that integrate water into their business strategies.”

She added that this showed the issue had moved “beyond risk” and is now recognised in terms of “real value ready to be captured by companies in our portfolio”.

However, it is also clear form the report that there is much to do for many companies. Only 12 per cent of those responding to the survey in 2022 set pollution targets that would be monitored and enforced by those in senior management positions, while only eight per cent had set water, sanitation and hygiene targets.

What that means is not just that general water management by firms is not as good as it should be, with all the environmental consequences that brings, but that many firms are not leveraging the financial benefits of improved water efficiency.

If you want to improve matters for your firm, it could be that the water supplier you are using is not doing enough to help you. The first step from this point may lie in finding a supplier who will actively support you to set and meet water efficiency goals.

The timing of the report is no coincidence. It was published in World Water Week, (August 20th-24th) when an annual conference takes place to discuss global water issues.

On the face of it, it may at first seem like issues of anthropocentric global warming, thinning glaciers, receding ice sheets and changing weather patterns are way beyond anything a single company can do.

However, quite apart from the efforts everyone can make to lower carbon footprints, the report has shown that there are steps in water efficiency and safeguards against water-related threats (such as storms and floods) that every firm can take and benefit from.

The theme of World Water Week 2023 was ‘Change: Innovative Solutions for a Water-Wise World’. This focus on water management sought to explore what ‘ideas, innovations and governance systems’ will be most effective in helping use water more wisely and efficiently. The event was attended by 15,000 representatives from 193 countries.

Among the key points to emerge from the week was that innovation is not just a matter of new technology, useful though that is, but wider strategies that involve “new management approaches or policies”.

Some of these considerations related not to companies but to city-wide authorities, where the prime consideration is municipal facilities like water and sewerage systems. Examples of best practice that were cited included Hyderabad in India with its use of water recycling technology.

But this is not just about local or national governments; the fact is that as countries like India, now the world’s most populous, see their economies grow rapidly, major companies will also expand their presence there and, to a large extent, use the same water resources as everyone else in the country’s many huge cities. Better water use helps everyone.

Such issues do not just apply in India, of course. Here in the UK, London’s own sewerage system is being enhanced by the Thames Tideway Tunnel. But commercial firms in the capital and elsewhere in the UK must take their own steps to use water more effectively, whether it is extracted from rivers or reservoirs, or can be recycled in-house.

The global challenges are clear, but the fact that there are financial gains to be made from better water use should be all the incentive commercial entities need to make major improvements.

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