North America, Europe, Asia, South America
Confidential (food and beverage, technology, hospitality, electric power, agriculture)
World Resources Institute (WRI) – Aqueduct Water Risk Atlas, World Wildlife Institute (WWF) – Water Risk Filter
Water is a critical resource for every business. Companies face water-related risks driven by various factors, including competition for water, pollution, regulation, and climate change. A water risk assessment identifies potential water-related risk exposure in a company and can serve as a foundation for setting water-related goals, organizing a response to mitigate risks, and helping address shared water challenges in the places that matter most across their value chain.
Businesses can face water-related risks across three categories: physical (water quantity and quality), regulatory (laws), and reputational (public perception of a brand). Businesses can be at risk of lost revenue due to water supply or supply chain disruption. Higher operating costs will be incurred if the cost of water supply, water treatment, or energy production increases. There are also potential costs related to permitting, compliance, fines, litigation, or insurance. Finally, there are costs if there is damage related to the public perception of a brand.
Water stewardship is a continuous journey, one that requires businesses to move beyond internal water management and commit to sustainable management of shared water resources through collective action and partnership with other businesses, NGOs, and communities. While each organization has a unique path and its own water stewardship journey, a common set of elements play an important role and are woven together to develop a holistic water stewardship strategy. At LimnoTech, we recommend that our clients first understand site water risks, shared water challenges, water stakeholders, and ongoing initiatives at each location or site of interest.
How We Help
LimnoTech has conducted water risk assessments for companies across a range of sectors (food and beverage, hospitality, electric power, tech, and agriculture). Our objective is to help our clients develop water strategies to address identified risks and opportunities and set goals to improve onsite water management, and work “outside the fence line” in collaboration with NGO partners and local stakeholders.
Working with our clients, we develop a tailored approach for conducting water risk assessments with consideration of the unique context of each site and local watershed. The approach and methodologies developed follow best practices and are consistent with the guidelines prepared by the CEO Water Mandate, World Resources Institute (WRI), World Wildlife Fund (WWF), the Alliance for Water Stewardship (AWS), and other reputable organizations.
The water risk assessment approach involves a qualitative and quantitative assessment to identify key risk drivers that impact direct operations, local watersheds, and the communities where an organization operates.
Components that are often considered in a water risk assessment include:
- Site water balance to understand supply and use.
- Physical scope (i.e., site and source watersheds) for the facility.
- Risk indicators from existing frameworks (e.g., WRI Aqueduct Water Risk Atlas, WWF Water Risk Filter) are evaluated, including physical indicators that address water scarcity, flooding, and water quality, and potentially, reputational and regulatory risks.
- GIS spatial analysis to extract water risk indicators for the site locations.
- Site-specific review to cross-check results from indicator and risk screening tools and perform additional desktop research on local shared water challenges that are relevant to a site.
- Climate change effects to factor in disruptions in hydrologic cycles and water supply.
- Identify and rank sites to determine the high-risk locations.
Based on the above considerations, we formulate an approach to identify the risk pathways linking physical quantity risk with site dependency on water and any specific water-related threats to the site’s operation. The method includes ranking (e.g., high, medium, or low) for exposure to quantity risk and to help prioritize response actions. To complement the risk assessment, we often also outline meaningful interventions that are relevant for mitigating water-related risks. We also support our clients with disclosures by utilizing the outcomes of the risk assessment to formulate responses to various water disclosure and reporting frameworks, including CDP Water Security, Sustainable Accounting Standards Board (SASB), and other relevant platforms.
LimnoTech’s goal is to help our clients understand where they touch water and the associated risks to move towards formulating response strategies and prioritizing actions to mitigate risk.
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