The latest report released by the Intergovernmental Panel on Climate Change (IPCC) told us that 50 percent more people will live under conditions of water stress if global temperatures increase by 2 degrees Celsius, as opposed to 1.5 degrees. And while the private sector must double down on its ambitions to achieve rapid decarbonization of the global economy, it must, at the same time, do everything in its power to protect the freshwater resources that are essential to all human and economic activity.
Indeed, there are hopeful signs of growing ambition from large companies to better steward the freshwater they so rely on. Take for example, Mars and its goal to ensure sustainable water use in its supply chain, with an interim target to halve unsustainable water use by 2025, through an aggressive program of working with farmers in its rice and mint supply chains to drive down wasteful irrigation.
At Ceres, where I serve as the senior director of water and food, our goal is to ratchet up this sort of water ambition among leading companies and investors. That’s why, with our partners at World Wildlife Fund (WWF), we have focused on the food and agriculture sector as mission critical. In 2016, we launched the AgWater Challenge, with the specific intent of raising ambition among the world’s most influential food and beverage companies in the most water-intensive industry—agriculture.
With the global food sector using 70 percent of the world’s freshwater supply, food and beverage companies play an important role in protecting water quality and quantity. Most recently, Target and ADM joined the seven other companies participating in the Challenge in making commitments to better protect freshwater resources in their agricultural supply chains.
Unfortunately, when it comes to water stewardship, most large companies are still swimming in cramped fish bowls of relative ambition. They benchmark their water stewardship efforts against those of their peers—and not against the size and scale of the problem. This keeps collective water ambition low and increases the long-term risks for companies, as well as for communities.
The flip side, or perhaps the evil twin, of low ambition is what I call the Tardigrade Syndrome.
A tardigrade (also known as a “water bear”) is a microscopic invertebrate that can survive in a dehydrated state for years at a time. Water bears are among the hardiest of multi-celled animals. Dry them out and they will happily go into an indefinite state of suspended animation.
The Tardigrade Syndrome is when corporations take a hunker-down, go-it-alone approach to managing water risk. It’s when they falsely believe they can insulate themselves from the risks posed by our shared interdependence on water through a narrow reliance on water efficiency, geographic diversification, shifting suppliers or hedging commodity prices.
And while these approaches can minimize short-term risk, they ignore the fact that we live in an interconnected world and operate in an interconnected economy. Unlike tardigrades, human beings cannot live longer than three or four days in a dehydrated state. And in a 2 degree-world, or even 1.5 degree-world, companies likely won’t do much better.
Being more ambitious means shedding the go-it-alone mentality. Ratcheting up water ambition means embracing the fact that both science and policy are arenas in which businesses must fully engage. It means looking science in the eye and embracing the goal of zero harm to freshwater—even when we know we cannot achieve this ambition alone.
And there are a million reasons why these things are hard, if not seemingly impossible, for many companies. And certainly, a lack of understanding and interest from shareholders has been a critical barrier. To address this barrier, over the past three years, Ceres has built a global alliance of investors, the Ceres Investor Water Hub, made up of over 100 institutional investors with $20 trillion in assets under management. These investors are working with Ceres and their peers to address water risks in their own investment decision-making and to increasingly engage corporations on the issue.
As a result of this collaboration, we have seen the investor community gradually ratcheting up their own commitment and levels of ambition on water. Over the past two years, our corporate and investor members have volunteered hundreds of hours to develop a joint, open-source learning resource—the Investor Water Toolkit—designed to showcase best practices and point the way forward. As part of this work, investors developed a view on the industries and sub-industries most at water risk. Their analysis shows the degree to which water risk is potentially systemic across markets.
Ambition is also growing within individual investment firms. Last year, the Florida State Board of Administration, one of the largest pension funds in the U.S., undertook a water footprinting of its equity portfolio, among other things, to help inform its corporate engagement strategy. Other investors have begun to align their investment approaches with Sustainable Development Goal 6 on water. Most notable is Dutch pension fund PGGM, whose work to quantitatively assess its funds’ contributions to SDG 6 has taken on board the input of the scientific community.
And just last year, asset manager ACTIAM set an ambitious target to achieve water neutrality for its US$64 billion portfolio by 2030, which it defines as investing in companies that “consume no more water than nature can replenish, and cause no more pollution than is acceptable for the health of humans and natural ecosystems.”
The IPCC report told us is that it is within our power and ability to prevent the worst impacts of climate and water-induced catastrophes.
There is immense risk if investors and companies don’t act, but there is also boundless opportunity if they do. With trillions of dollars in assets under management, the global investment community must play a role in investing in solutions to our water and climate challenges, as well as demanding higher ambition from corporations to do the same.
We know there is a long road ahead to achieve a 1.5-degree world, and investors and companies have a critical role to play.
To all of them, I say we must work together to ratchet up our water ambition—and the time is now.
Image credit: Matze Scheel via Unsplash